Taking on Debt
A simple few suggestions about when to take on debt and When to Avoid It. Know whats up. Video production is expensive.
The good the bad and the ugly
Debt…we all cringe at the thought of carrying it, but when you are growing a business or working as a freelancer it can be a fact of life. In fact, it can actually be a good thing if it is helping to establish a good credit score for the business and acquire the kinds of assets or equipment needed.
Just like standard consumer debt, however, it comes with interest, and it needs to be repaid as quickly as possible. And that means that you must use it with attentiveness and caution. For instance, a major “no-no” is to use it for any sort of recreation, pleasure, or non-essential.
The only time debt should come into your business life is when it is to acquire a performing asset or to provide you with the basic means of conducting the business. In other words, debt is good when it allows the business to move to the next level.
Buying a high quality video camera and attempting to design a production for your website may not make sense if you are taking on large amounts of debt to do so. This would be the time to “hire your weakness” and allow a professional director or creative team to make something for your needs.
Essentially, you must always consider any expense carefully and make purchases based on the ROI or the need of the items or services. Again, let’s say you are considering website development. You can do this as a DIY project for a while, but if your business grows, you need to have professional design that includes every aspect of marketing – inspiring storytelling, video content, and more.
Why? The website has to perform, and that means you can realistically view it as a performing asset. This would warrant the use of capital or debt as it is something essential to the life of the business, or may even be the entire business itself.
There are some expenses that might also be unavoidable, but which must never be allowed to become a debt the business or your freelance enterprise carries. Vehicles and office space are two such expenses. If you can avoid these hefty burdens your business will be stronger for it. (Schreter, 2012)
The administrative work of running a business can often feel like it is imposing on the actual conducting of the business. Whether you are in a creative enterprise or not, the day-to-day worries about debt and finance are not inspiring. However, giving these things some thought in advance, laying down your own rules about debt, and sticking with the plans are keys to avoiding monetary mistakes.Read - How much does video cost