The 80’s was the start of the bull market economy. You could invest your money in bonds which were paying out at a flat 15% interest rate, risk free. It was a good time to invest in companies because the corporations were forced to compete with 15% rates to be more efficient and investing their capital wisely.
Winding the clock forward to present day, the federal reserve have been printing money excessively and have been giving corporations access to cheap loans. As a result, companies are over valued through stock purchases, share buybacks which means they are not investing in their future growth. The over supply of money printing is reshaping the global economy which is non sustainable and there is now too much corporate/ private debt.
Global Economy Outlook
The outlook of the economy appears more sketchy as interest rates are low, some countries are at 0% and others facing negative interest rates. To keep afloat, companies need to reform otherwise they could possibly go out of business. The problem today is that although the banks have been bailed out, they have sunk the bail out money bank into the stock market again instead of filtering the money down to the population. This has a tremendous effect on the economy as people aren’t investing money, or buying goods and services to fuel the economy. This is now leading to another rising global debt bubble. The fact that many US student have defaulted on their loans due to the lack of jobs and people are unable to repay them. There is a potential housing crisis in the UK and Australia and manufacturing is slowing down in China. Once you have private debt levels growing more than 150% of GDP, there will eventually be an economic crisis.
Invest In Your Business
Looking at the state of the economy today, banks are tightening their belts and it’s hard to get a business loan. The circulation of money (or debt) has been recycled, this can have a huge effect on your business. The key aspect of this is knowing how to protect your business from certain economic collapse and how to mimise risk to you business and investors. Companies, Governments and the general population load up on debt during good times, only to struggle to repay those debts when the economy takes a turn for the worse. Much of the cheap flow of money has gone towards building up cash reserves and “saving the money for a rainy day” as opposed to capital expenditure to improve companies and make them more competitive.
Too often when a business is cash-strapped, the owners focus on the day to day running costs. They spend more time trying to keeping the business afloat than knowing how or what can propel the business forward. Some companies tend to reform by either reapplying for more credit or laying off workers or both.
Grow And Expand Your Business
Growing companies may consider raising capital to reach their next milestones by scaling their business growth proportionately. There are things to consider as a company grows as it could lead to what is known as “gowing pains”. This leads to the the chicken and egg situation (as in what comes first iin terms of growth) When looking at a company that scales up, they may need a bigger building for operations, skilled team of workers and consider upgrading equipment to keep up with the productions side of large orders.
Scale Up Your Business
If you are scaling up your business you may want to consider minimsing risk as you transform and develop your business internationally. There are means and ways of using money to maximise business opportunities without having to give up some of your equity or bring in “fast cash” instead of waiting for some time to get the full crowdfunding investor amount. Nowadays entrepreneurs look at new ways of financing their business and more peoplle are starting to see how leasing an SBLC can help them raise capital in a short space of time.