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re: Starting Your Own Business: Early questions
Posted on 1/16/14 at 8:09 am to GoHoGsGo06
Posted on 1/16/14 at 8:09 am to GoHoGsGo06
quote:
Not having cash and having net worth "tied up" in receivables doesn't sound great to me. Neither does having my net worth tied up into depreciable assets either. That's just me though.
Well the appreciable assets are the real estate the company owns --after all these years the buildings are worth a pretty good bit more than the depreciated balance sheet. The most valuable thing is off balance sheet too---the trademarks and brands.
Unfortunately to turn those appreciable assets to cash means to end ownership of the business.
You are exactly right about cash being tied up in AR and depreciable assets. That is the nature of hard good manufacturing or distribution however. A beer bottler, for example, is going to have a lot of money tied up in bottling equipment and receivables and both ingredient and finished good inventory. If the bottler gets into distribution--and he has too somehow either through loss of margin using an existing distributor or with his own trucks--then that eats cash too.
To grow such a business is going to consume the cash the company generates.
Selling media content or soft ware content is far less cash consuming thus the suggestion to write a book or make a film or do a website on brewing if that is what interests the guy.
This post was edited on 1/16/14 at 8:12 am
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