Do you get more money with better equipment? In this case, it is appropriate to consider the investment. No matter what you need to grow your business. The important thing is how it helps you. E.g. the steam cleaner will provide the cleaning company with an expanded service, the graphic designer will work faster on the computer with the better graphics card.
Borrow or save
Non-bank loan or own resources investigation? This can be a challenge. For the right decision, consider whether you are willing to bear the risk or whether you need a sense of security.
- You want security and comfort. You’d better wait for the outcome than risk taking a foreign money investment. Before choosing savings, think about postponing your investment to lose a good order to move you further.
- You like speed and efficiency. You do not stop the risk and want to enjoy the benefits as soon as possible. If you think well and follow the security rules, a non-bank loan is suitable for you.
How to calculate whether you can do it
If you have decided on a loan, think carefully about whether your monthly payments will derail you financially. The ideal is when a new investment starts earning as soon as possible .
If you’re not sure whether your earnings are already well above spending, check your orders over the last three months. Calculate how many of them would generate more money if you were working on a new machine or how many customers would be added without capacity constraints. This gives you a rough estimate of your revenue increase and then profit.
Security repayment rules
The expected profit calculation can look great. But keep in mind that this is your optimistic estimate. In fact, it will take some time for the investment to be reflected in your wallet. So give extraordinary green pessimism and reduce your estimates to 20% . You can calculate this with greater confidence.
Example: You earn $ 100 per month. Thanks to the investment you estimate that you will earn CZK 5,000 more. After you apply a security rule (multiply by 0.2), you reduce your estimate to $ 50. You will earn CZK 21,000 with the new equipment. Can you repay this income so that a non-bank loan does not derail you? If so, everything is fine.
Another good solution to avoid difficulties and stress is to provide a financial reserve for unexpected cases, insure repayment insurance and the possibility to change the amount of repayment. To learn more about a responsible loan , read the article on ways to avoid repayment. In short, a non-bank loan can be a good servant, but a bad master. Therefore, it is necessary to think carefully and calculate everything in advance.