Its easy to see why we would avoid debt but when it comes to business, this isnt always the best way to manage cash flow. Not all debt is created equal; Some good debt can actually help grow your business. Rather than oversimplifying all debt as bad, there are a few simple ways to identify which are good, bad, or ugly.
Good debt will generate more money or value than the loan this is known as a positive return on investment. For example, a $15,000 loan for a business opportunity that increases sales by $30,000 is a worthwhile investment using good debt.
Bad debt costs your business more than you get out of it. For example, if that same $15,000 loan only increases sales by $5,000, its a bad investment.
Its important to note that were no…
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