When Borrowing is Too Easy
When my husband and I first bought our golf course, we were new to the world of small business.
We came from more than a decade of working in large companies, and understood the fundamentals of strategy, budgets, systems and leadership. We had no fear, lots of ambition, and plenty of ideas. We were ready to jump in, work hard, and figure things out along the way.
And for the most part, that’s exactly what we did.
We also had a great team of advisors around us — bankers, lawyers, accountants. But the thing about advisors is this: if you don’t know what questions to ask, you may not get the answers you need. It’s a case of “what you don’t know can hurt you!"
And in small business, those advisors can feel expensive. So instead of calling before we made decisions, we were more likely to figure things out ourselves — and then call them later to help clean up the pieces.
One of our early challenges was around cash flow. The business was seasonal, so for seven months of the year, everything was great. The parking lot was full, the restaurant was busy, and cash was flowing. But for the winter months, we needed to plan ahead. We knew this going in, but for the first few years our forecasts were more like educated guesses. We were still learning the rhythm of the business.
I remember going to our bank after that first season and explaining that we might need just a little extra room to get through the off-season. Business was good, next year looked promising, and we had a profitable business. Taking on a little more debt made sense. And it was easy.
Maybe too easy.
We did it again the next year. And the year after that.
The problem wasn’t the bank — not really. They believed in us, which was nice. But no one understood our business enough to ask the harder questions. They saw numbers on a page, but didn’t understand some of the assumptions we made in the process.
It took us a few years before we finally stepped back and looked at the business differently. And most of the solutions were surprisingly simple.
We changed our annual lease payment into monthly payments instead of writing one huge cheque because “that’s how it had always been done.” We renegotiated equipment leases to better match our seasonal cash flow. And we stopped spending money at the end of a strong summer on things that could wait until the spring.
Simple changes.
But they easily saved us thousands of dollars in interest, and many nights of lost sleep.
The biggest lesson? You don’t have to figure it all out yourself. Sometimes the cost of good advice feels expensive in the moment — but the cost of not getting it can be far greater.
If you find yourself regularly dipping into your line of credit to pay bills, cover payroll, or pay yourself, it might be worth asking:
Is this solving the problem, or just delaying it?
What will have to change in order to break the cycle?
And what will it cost — financially and personally — if nothing changes?