When Credit Hurts
__p Fact: The IT distribution business depends on credit to survive.
p____p Fiction: Credit actually allows the partner to gain a competitive advantage.
p____p It’s a misconception that if you get access to more credit, you will be able to buy more products and therefore sell more, and thereby earn more money. For the truth is, that the extra money earned goes into paying back the interest that has accumulated on overdue loans.
p____p Most of us are so caught up in this vicious circle of Get more money, buy more products and sell more’, that we dont even know that we are functioning in a whirlwind. We keep doing the same thing month after month, without even realizing that in the haste of meeting the wants of today, we are forgetting to plan to meet the requirements of the future. Beating a competitors bid becomes so essential for survival that we dont even realize that we dont have a strategy or a business focus to concentrate on tomorrow.
p____p And thats when credit hurts the business, as it impairs the vision to plan. It hurts even more because when money comes easy, it limits the need to become more innovative and aggressive in the business.
p____p As smart businessmen you have to watch out for yourself. The IT distribution industry has no entry or exit barriers. Manufacturers and distributors are of the opinion that the lack of these barriers is actually what gives the industry its competitive advantage. But this is not true. There will be no accountability, if there is no system to make you accountable.
p____p Therefore its essential for you to put in your own system of checks and balances in place and to adhere to those guidelines in all your business dealings. Remember, there is no such thing as free money.