Every business in the history of the planet relies on loans or equity investors.
Your comment is on of the most ridiculous I’ve ever seen on this site.

Really?

My business is 10 years old this year. We employ 18 people in 2 offices in Ireland. We have served over 130 customers across 22 countries world wide. It was formed based on investment from the founding directors only and we have never availed nor needed credit.

Well you had that loaded in the back pocket didn’t you.

Congratulations on your success, but my point still stands. You were obviously in a position to make a directors loan to your own company. The majority of people need access to credit for cash flow, expansion etc. and that obviously varies depending on the sector you’re in. I don’t see anyone starting a bioscience company with 10k of savings.

I did indeed… And my investment in my business was an equity investment, not a directors loan. I started my business at 26 and the investment was every penny I had, including remortgaging. I borrowed, the business didn’t.
Of course, if you are a product company that is going to incur R&D costs long before you hit revenue, that needs to be funded.
If you are any type of business (service, retail, high tech etc.) having access to short term credit can be hugely advantageous. However relying on it in the long term is damaging, as you end up running your business to service the debt, rather than looking forward.
My point is the same and aimed at Government assistance. Don’t rely on it. Treat it as a bonus, not a necessity. I remember spending 6 months at the start formulating business plans and cash flow forecasts, all so I could appease some bloke in Enterprise Ireland. As soon as we decided to drop it and focus on the business instead, things got done.

The Mick Wallace approach, I borrowed but my business didn’t!

Fair enough on you success- but I think your original point is inaccurate, especially today where suppliers are withholding payment is a common occupancy.

If you can’t comprehend nor differentiate between someone taking a personal loan and spending that as they wish (in my case investing in my business), and a limited company taking a loan, then you’re as naive and as stupid as your original comment suggested.

Dying to know what your business is ciaran, any jobs? ;-)

Putting aside accounting, legal or any other semantic positions, you took a loan to finance your business.
You can’t then take a position that a business shouldn’t need a loan to start, expand or even, in a worst case scenario, fund cash flow problems when debtors aren’t paying.
With respect, you started your business during the biggest post war boom in history, a time where people in Ireland had so much money they purchased investment properties in Bulgaria and put hot-tubs in their back gardens.
Starting and expanding a business now, for the majority of people, requires credit. You can’t possibly believe that, just because you we’re lucky enough not to need it (I’m generously ceding you that point or the sake of brevity) does not mean that any business with a loan is doomed to failure.

You may dismiss it as semantics, but there is a very clear distinction.

My company was founded by 3 directors, each making an equity investment in the company. My investment was funded through both savings and debt. I can’t comment, neither would I comment on how the other directors came up with their investment equity.

But the company was NEVER in debt. It was a capital investment in return for shares in the company. There was no debt on the balance sheet and thankfully, through careful financial management, frugal operation and a lot of luck along the way, we have never taken on any debt (apart from company credit cards – cleared each month). Our growth has been through revenue/profit – not loans or additional investment.

I did not suggest that a company taking a loan spells the end for the company. I said that if a business requires a loan to make it viable, then it’s on the road to failure. Capital investment (equity or loan) for growth is a normal thing in business – but in an economy like this, companies should be VERY slow taking on debt to fund growth unless success is largely guaranteed. Similarly short term debt to manage short term cash flow issues is also a norm and far from detrimental to a business.

Carrying an over draft or loan on a long term basis though in order to balance the books suggests something fundamental is wrong with the business.

And yes, in 2002 when my business was established, cheap and easy credit was available. To be honest though, I don’t believe that was a good thing. People and businesses should be debt adverse, not looking for easy credit again. If you NEED assistance from the Government in order to start a business, then is it really a viable business that you are looking to establish?

We’re involved in microelectronics John – we are a services company that also delivers training and develops software that aids the design process.

http://www.icmaskdesign.com/

Apologies for the duplication

Ciaran did you ever run a business that failed?

No. But in fairness, this business is 10 years old, started when I was 26. So there wasn’t a huge amount of time between university, my first job and then starting this business to squeeze in another one.

But I am involved in a business angel investment group and have both invested in and been on the board of companies that have had to fold and others that are struggling today (as well as some that are prospering)

Ciarnan you seem very well educated & articulate & well versed in your field & thats not patronising however if you think rubbishing the comments above is appropriate I would challenge that. You remorgaged you got investment from differents sources, technically all credit. If your business ever goes you will loose everything & as a business man that has had failed & successful businesses you will have very steep learning curve ahead of you. The shop owner will not have the same opertunities as you have so your advise to anyone in the service industry would be? Businesses need banks & credit & more importantly banks need businesses & customers.

Your definition of credit and mine obviously differ greatly.

Credit must be repaid over what ever period of time. It is a debt that sits on a balance sheet. An equity investment is not repayable. The investor gets a return through an exit (trade sale or flotation) and perhaps through dividends or other forms of profit sharing. But the business does not repay the capital.

Secondly, if my business ever goes under (touch wood it won’t.. at least for some time yet), I have been smart enough to diversify. My entire “wealth” is not tied up in my business. For one, as I have mentioned, I’m involved in a business angel network that makes investments in early stage and seed businesses. But I have been careful to extract enough wealth from the business so that it still remains profitable/sustainable whilst building and investing my own personal wealth. I am largely as debt adverse as my business is, and with the exception of some mortgages I do not have any loans.

Thirdly, at NO STAGE did I rubbish anyones comments apart from Cliff – but that was in reply to his statement. I pointed out, and I’ll point out again, that Government support should not be a requirement for someone to start a business. If it is, you should really consider is it a viable business in the first place.

An investment may be required, but there are far better sources than Government funds for this.

I have also been at pains to point out that short term loans/credit for cash flow etc. are the norm and essential. Loans for growth are also a norm, but should be considered very seriously before taking them on – effectively you’re gambling with someone elses money.

Yes, banks are needed by us and yes, we are needed by the banks. But the Irish appetite for credit is enormous. A more debt adverse stance is a more sensible one.

Enjoy that curve its in the post!

Tom you have to sign to say your self employed. Sign what & for who. This is quiet vague & I suggest illegal.