Other’s Money – Ways to Leverage Yourself
The third form of leverage is Other People’s Money. Your ability to borrow money, and to otherwise tap into the financial resources of other people, can enable you to accomplish extraordinary things that would not be possible if you had to pay for them out of your own resources. You should continually be looking for opportunities to borrow and invest money and achieve returns well in excess of the cost of that money. There are numerous sources to explore, including Chartered Banks, Savings and Loan Associations, Venture Capitalists and both Public and Private offerings of shares to name a few. The wise entrepreneur develops a solid relationship with a bank from the beginning. The best time to borrow money is when you don’t need it. This may sound trite, but it is true.
Borrow a small sum, place it a safe security such as a security of deposit or treasury bill, and in a few months, pay it back. Repeat this process several times. In this way, you will establish a strong credit rating and a positive track record with your bank. This strategy of consciously building a strong credit rating will pay big dividends on that day when you do need a loan. And rest assured, that day will come!