Odysseus Papadimitriou, writing in entrepreneur.com has an interesting post, but he’s got several mistakes (not just one) in using credit cards that he outlines,all of which are pretty valid.<\/p>\n
We did a post on this topic a while back, but this article mades us think of a couple of other problems with the blogpost written by Mr. P.<\/p>\n
1. Entrepreneurs are using credit cards in the first place because they’ve either used up their savings or think that if I defer this expense for a month, I’ll be ok. If the company is growing rapidly, it’s hard to fault this thinking.<\/p>\n
2. By and large, entrepreneurs can’t get equity loans in the first place, unless they come from one of the crowdfunding sites. So, they have no recourse but to use credit cards.<\/p>\n
3. If you look at your cash burn rate (cash reveues less cash expenses) when you start, and you have enough in credit card limits to fund yourself until breakeven, it makes sense to use credit cards. However, in our experience, launches always take longer and cost more than planned, so entrepreneurs get into trouble.<\/p>\n
4. If\u00a0your return on operations\u00a0is potentially higher\u00a0\u00a0than the credit card charges, it makes sense to use credit cards, but you’ve got to have enough limit on the cards to fund until breakeven. However, again, beware of longer than expected periods to breakeven.<\/p>\n
Anyway, here’s the link to the article: entrepreneur.com\/article\/224350<\/p>\n","protected":false},"excerpt":{"rendered":"
Odysseus Papadimitriou, writing in entrepreneur.com has an interesting post, but he’s got several mistakes (not just one) in using credit cards that he outlines,all of which are pretty valid. We did a post on this topic a while back, but … Continue reading