When you choose to follow one path, you necessarily don’t take another.
“The Entrepreneur’s Dilemma: Should You Maximize Cash or Equity?” is Carol’s recent post on the Bank of America Small Business Community. In this post, Carol walks you through a thought process for evaluating your right path to grow your business. She begins:
As an entrepreneur, you will probably face a handful of major consistent dilemmas, but one of the most persistent and complex is the way you approach the value of your business. This boils down to a struggle between running your business to maximize cash—that is the money that you have in the bank each year—or to maximize equity—that is the overall value of the business entity.
These choices are very much at odds.
Maximizing cash means that you may take on non-core clients because, well, they bring in more cash! It also means that you pinch every penny and may make decisions that payoff a little today, but don’t add value in the long-term. This includes forgoing investments in arenas like marketing and personnel that often require a cash burn before you see a return on the investment.
You can read the rest of the post here.