Question
While I was reading it I kept reflecting on how my company, which would be considered a large corporation, handles capital budgeting. We have many
While I was reading it I kept reflecting on how my company, which would be considered a large corporation, handles capital budgeting. We have many revenue streams and make investment decisions with the benefit of a long runway. It is interesting to look at this same scenario from a small business owner's perspective. Many times small businesses and startups are just trying to get by and operate paycheck-to-paycheck. They are reliant on bank loans which ultimately have a maturity timeline. It is frustrating to know that small businesses must make financially detrimental decisions to choose an investment option with a quicker payback period simply to make loan payments. I understand the position of the bank but if a small business owner can show promising NPV for an investment over a longer period then it could be very beneficial to both the owner and the bank to wait it out. I'm sure there are investors that realize this and are more patient when offering loans, but I believe this is a missed opportunity.
Do you have any recommendations for how smaller businesses can move forward without having to rely so heavily on bank loans?
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