This word excites a lot of entrepreneurs.
Why?
When they hear "leverage", they think of Grants, Loans, Mortgages, and other sweet things that increase capacity and make growth possible.
Leverage is powerful.
Now, you agree with me that what has an advantage also has a disadvantage.
Most people get carried away by the emotion that comes with the advantages of leverage that they forget the Due Diligence required to forestall the disadvantages.
Let's make it more practical.
Recently, I got a WhatsApp message from an unknown number. She introduced herself as an agent from XYZ company.
She went on to tell me about one of my contacts who was on the run.
He had borrowed some amount of money from their establishment to finance his business. When it was time to pay up, he absconded.
"They are looking for him with the Police," she said.
That is definitely an extreme situation, right?
But you get my point.
Due Diligence is what you do to assess all possible contingencies. Most times, we start ups underestimate the actual costs required to run our ventures.
And then we overestimate our potential profits.
Then we run with that Adrenaline surge only to hit rock bottom.
Loans are great when you have a predictable system producing consistent cash flow.
Note the words "predictable system" and "consistent cashflow".
It means that money coming in will be used to scale the already profitable system.
I use system intentionally.
So, before you take on any form of leverage, ensure you have done your due diligence.
Keep soaring!
Your Value Emperor,
Godknows Ogbu.
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