The Rise & Rise of the Celebrity Electrician

[Electrics]

Think you’re wasting your time trying to argue this point ??

I’m sure Amazon would have a new CFO if Jeff Bezos ever came across this thread!

The real funny thing is you wouldn't believe how little actual money Amazon makes and that Jeff built his entire business model on shifting money from Peter to Paul. You couldn't have possibly chosen a better example to prove my point.

Amazon has $33bn of debt ??

 

[pirate]

Oh well, I don't have your insider knowledge @Electrics so I will just bow out now.
I have a busy day tomorrow managing my portfolio of 80 rentals, getting someone to valet my stable of exotic cars, and arranging a private jet charter to visit my property in Spain...all paid for and debt free!
Mind you, when I park in the local town centre, I never have a pound coin for the meter...

 

[mattg4321]

Running a small business is a bit different to Amazon though. There are a few ways to do it.

I’m sure you’re probably not as well versed in some of them as you are in the finances of big multinationals though!

 

[nicebutdim]

Every single one of the richest people on earth use debt to their advantage. The mindset of don't use debt is one that has been taught to the lower classes. There's a reason Elon Musk etc have billions in net worth but can't pay small fines because they have no cash flow.

I don't dispute this.

The problem isn't debt, the problem is that people don't know how to use it properly.

Or this.

Anyway the point is Nagy isn't a fool for chucking his repayments down the road - it's actually a very smart business decision.

That's pretty much the point I'd originally made about Tom Nagy.

While I understand your point that not everyone understands debt and how it can be used to one's advantage, it also appears to be the case that you fail to understand that not every rich person, or successful business, conforms to this model or the variety of reasons why they choose not to.

 

[Electrics]

I respect your right to your opinion on this, but I am a little concerned with your terminology of "the lower classes" as i feel this is an unnecessary discrimination/subdivision with no boundaries defined and possibly offensive to some. You have absolutely no idea of my "class" nor what my business was, nor my outlook on life. I have and never had, any vision of being super-rich, but I'm ok!
Thus, in my opinion, a debt - free business model is a perfectly viable option, it suits some, but not everyone. That's my point, and I hope you respect it, even if you dismiss it as a model for your own circumstances.

People who aren't rich don't understand debt and how to use it. I'm from a council estate, not even 'working class', but 'benefit class' so there's no 'discrimination' going on.

How's about we all forget it's 2021 where people complain about their feelings and simply ignore comments we don't like instead of going all social justice on them?

 

[Electrics]

Oh well, I don't have your insider knowledge @Electrics so I will just bow out now.
I have a busy day tomorrow managing my portfolio of 80 rentals, getting someone to valet my stable of exotic cars, and arranging a private jet charter to visit my property in Spain...all paid for and debt free!
Mind you, when I park in the local town centre, I never have a pound coin for the meter...

I'm surprised you won't be spending that time making a police complaint about someone hurting your feelings.

 

[pirate]

That's just one step too far, IMHO.
Some people who don't understand debt are very rich, some just HAVE to use it, because they are very poor.
I'm not complaining about my feelings, nor going "all social justice" either.
Yes, clever use of debt can be really useful, but if I want to be debt free that does not make me an idiot. It works for me, and I dn't have to worry about my yacht being repossessed. If you are so good with debt leverage why do you describe yourself as "benefit class"? Surely with your knowledge on this topic you should be above any mundane chat about debt.
As for 2021...I am fed up with all this "woke" nonsense, the apparent rules about how many people of different ethnicity have to appear in an advert for a fkn mattress, and the idea that no-one is allowed freedom of expression.
Go your own route, but don't suggest that everyone else is wrong.

 

[mattg4321]

People who aren't rich don't understand debt and how to use it. I'm from a council estate, not even 'working class', but 'benefit class' so there's no 'discrimination' going on.

How's about we all forget it's 2021 where people complain about their feelings and simply ignore comments we don't like instead of going all social justice on them?

So I assume you’re rich as you understand debt? ?

 

[Zerax]

A credit account paid off at the end of each month is stretching the limit of a company being in debt to the extreme.

I'd call that part of your 'working capital'.

 

[UNG]

The real funny thing is you wouldn't believe how little actual money Amazon makes and that Jeff built his entire business model on shifting money from Peter to Paul. You couldn't have possibly chosen a better example to prove my point.

Amazon has $33bn of debt ??

And Amazon has some very good accountants who help it avoid high tax bills so don't believe all you read, the cash and asset pot will no doubt be in some ghost companies that are a good arms length away from the trading company called Amazon

 

[pirate]

Just for fun, I'll give you a tiny case study.
My daughter wanted her own flat, which is perfectly understandable.
I told her I would fund a decent deposit, as banks were a bit difficult at the time.
However, I also told her she must save every month to make sure she had a separate account into which she must put something every month, so that she always had at least 3 month's mortgage payments. That way, if she lost her job, or just hated it and had to get out, she had a bit of leeway while she found a new job. It's called "security" and is nothing to do with leveraging debt, just keeping a roof over her head.
I left it for a while, then asked her how she was getting on with her savings, given her employer had made noises about redundancy.
"No problem, I've got 6 months mortgage payments in that account, so now i can go out and enjoy myself, knowing I have that cushion".
she's now fully employed, and, as so many have these days, a couple of other jobs doing stuff online. The youngsters are not all daft! Everyone needs at least 2 jobs, preferably 3, even if the peripheral ones only bring in the bread and butter...the bread and butter to survive on, while the mortgage is still being paid...6 months is often enough time to find a new job.
Had she decided to branch out on her own, which she did with a couple of small ventures, she still knew she had a roof over her head. Those small ventures brought in good cash in difficult times, so she tightened her belt and worked very hard at them, a few pounds here and there...but she has never relied on the bank of mum and dad, and, apart from her mortgage, is debt free and enjoying life.
Of course, she might have asked the bank for funding for those small ventures...what do you think the response would have been if she had no savings and a mountain of debt?
Horses for courses...but don't tell me a debt-free model is a stupid idea.
She sleeps at night, has fun out with her friends, and works very hard at building her career without the constant nagging of bills she can't pay.

 

[Zerax]

Fact is all successful businesses leverage debt. Avoidance of debt is what those with zero business acumen practice.

There's actually an equation that you can use that gives a company the optimal split of debt and equity. The fundamental principle being that equity shareholders will demand a higher return to compensate for risk. So yeah, a mix of debt and equity is certainly 'normal'.

 

[7029 dave]

People who aren't rich don't understand debt and how to use it. I'm from a council estate, not even 'working class', but 'benefit class' so there's no 'discrimination' going on.

How's about we all forget it's 2021 where people complain about their feelings and simply ignore comments we don't like instead of going all social justice on them?

Wait just a minute, I grew up on a council estate my parents were poor but they always worked, them and myself never have claimed 1 penny on dole/benefits, and yes am working class. Done quite well for myself wont ever be rich but would say am more than comfortable.

 

[Zerax]

I've seen a number of large local, family run businesses bought out and run, by what appear to be, accountants. In short order, old plant that was owned outright is sold off and replaced with leased equipment. Interest rates are less of an issue in such circumstances, but this model is dependant on constant turnover - a few quiet months and there isn't the cashflow to maintain everything. At least when goods are bought and paid for, there's a better chance of weathering periods of financial uncertainty.

The principle of leasing assets rather that purchasing them outright is that you don't want your capital tied up in a fixed asset. It would often be better if that capital was used for say R&D or expansion or automation or advertising etc etc etc.

In your example above, it sounds like maybe (I don't know the details) the plant and machinery was being 'modernised' ?? Newer equipment that is more efficient ? more accurate ? easier to operate ? Just guessing...

 

[nicebutdim]

The principle of leasing assets rather that purchasing them outright is that you don't want your capital tied up in a fixed asset. It would often be better if that capital was used for say R&D or expansion or automation or advertising etc etc etc.

In your example above, it sounds like maybe (I don't know the details) the plant and machinery was being 'modernised' ?? Newer equipment that is more efficient ? more accurate ? easier to operate ? Just guessing...

Yes and no.

One particular example that springs to mind was a company that had been owned outright by the family that founded it and one particular large source of expenditure was, and remains, plant and trucks which were essential to the business.

Under family ownership those vehicles were bought outright and maintained within the company's workshop, but that's all gone and the new owners have nice new plant and vehicles, which is either leased (most expensive option) or subject to loans (less expensive). It's a model that works wonderfully, but will be sorely tested come the next downturn in construction. Under family ownership tha business continued apace when times were tough, due to ongoing expenditure being kept to a minimum. Under current ownership the company should certainly survive future economic downturns, but only when considerable measures are taken; such as handing back vehicles, scaling back production etc and these measures go hand in hand with cuts in emplyment - something that would have been anathema to the previous owner.

I use this particular company as an example for no reason other than the fact that, despite a construction boom on this island in recent years, the business has not become much more profitable under new ownership this despite a more cutthroat approach to profit and loss.

 

[ipf]

'being in debt' and 'leveraging debt' are not the same things.

Having a credit account and making your payments every month is debt. If you didn't build your company on debt it means you pay for everything outright and upfront which is why i said no successful company avoids debt completely.

I wish I was a successful bookmaker.........and, therefore, could afford to take the occasional hit.