I have a few friends who flip houses for a living; maybe you know someone that does it too, or at least you’ve seen a show on HGTV and you get what it’s all about.
The idea is simple. Buy a house that needs some work, put some money into it, and get a big return on the investment because of the value you added to the place.
It seems so simple in real estate, but in small business, this concept just doesn’t stick.
I know a lot of small business owners who are afraid to spend money, to borrow money, and to leverage money. And I think that’s what holds a lot of companies back.
In my first company, I took a $50,000 SBA loan to buy some equipment. But, from the day we pulled the trigger and made those purchases, my focus was how I could chip away at our debt until it was gone, and I realize now how short-sighted that was.
When I was given that loan, I was given the ability to leverage that money and create value in the market. Just like a house flipper purchases new appliances and floors to build a fancy island in the kitchen to get top dollar on the resale, a small business owner should look at the money spent as a way to maximize value for a return on investment. That $50,000 I borrowed wasn’t meant for me to make the loan payments, it was meant for me to make an impact.
So, if you really want to do something big with your company, you must be willing to get a little uncomfortable. I’m in the same position as I was with my first company right now. I’ve invested a lot of money (that I don’t have) in taking Trainual to the next level, but this time I see the big picture and I’m not worried about the payback.
When a real estate investor picks up a new wholesale property to flip, they know the sale price they can get in the market if they invest in upgrading the property.
So, next time you think about borrowing or spending a lot of money for your business, consider the ROI that you want to get out of your efforts. Otherwise, any result will do.