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Is Business Cash Advance Really "Dream Insurance"?

by on
in The Business of Business Finance

I hate articles where the press congratulates small business owners for "chasing their dreams".   I hate them because I see the other side so often, when people look back and wonder what they were thinking.  More than wonder, they are haunted by crushing debt and ruined credit.  It can take years to recover from a failed dream.

When small business owners look for a loan or working capital, the only question is typically "cost of funds".  If that is your only question as you search for working capital, that is clearly the wrong question.

Vanessa and Steve look like a very nice couple.  I admire them a great deal because they are both making their own way in the world.  She is a mom, business owner, wife and community member.  Anyone who as been there recognizes the challenge that presents.  I almost feel like I know her because I know so many wonderful people like her.

Here is the problem:  When you work longer hours for less money, drive trash home to save a few pennies and eventually have to sell your home, there is a problem greater than an economic slowdown.  There is a problem with your business which you, as the business owner, are incapable of seeing.

I wish someone would shake her rather than praise her, in the end it is a better form of love, which brings us the concept of dream insurance.  When you read the story of Vanessa, you'll see that she has always held a dream of running her own business.  My guess is that dream did not include driving home trash, limited opportunity, stress, sleepless nights and eventually selling her home.  Tough love is required here...

Now, Consider Jim and his two brothers.  They also had a dream of running a great local grocery store in Nebraska City, Nebraska.  It was a great and profitable dream for almost 12 years until Wal-Mart moved to town and the dream faded into a night mare pretty quickly.

Before the boys gave up on their dream, they spend over $190,000 to bring a coffee and sandwich franchise into their market.  They funded that expansion with a business cash advance and when the business ultimately could not survive the price cutting and volume discounts from Wal-Mart, they were able to walk away from the $97,000 remaining balance due on their business cash advance.

At the time, they had other funding options which could have saved them a couple thousand dollars in financing costs.  Instead, they decided to pay a little extra for "dream insurance".  Today, that decision has left them unencumbered from that $97,000 balance.  Today they are dreaming again, pursuing two new business ventures, and greatly relieved they spent a little bit extra to insure their dream, just in case.

Dreaming is essential to our economy and our country.  Our cities and towns have been built by entrepreneurs with big dreams.  However, you can not ignore business history and the reality that over 70% of businesses will not survive 10 years.  With those odds, dream insurance may not be a bad ides.

businessfailure

Business cash advance is one way to hedge the down side as an entrepreneur; perhaps you have another suggestion...?

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