Three years ago, I left a large company where I had served as the division engineer for the past twelve years, to become part owner in a small business. The owners hoped that the experiences I had would prove useful in creating a long range plan for their business and in developing a disciplined approach to the use of their financial resources. I was comfortable with the methods and techniques needed to implement these concepts, since I had used and supported them in my previous role as an engineer. The issue that I was not prepared for,
and frankly it has been a surprise, is the challenge that small businesses face in the procurement and/or development of a source of working capital to fuel the growth and expansion of their business.
As an engineer working for a large company, having a ready source of working capital was never a concern for me. Rather, if I could demonstrate that a particular piece of equipment or machinery, or change in our process, would generate either increased revenues or decreased costs enough to pay for the modification in two years or less, the money was on its way. However, in a small business setting, I was soon faced with the reality that although we could see many places where improvements to our process would realize us huge benefits in terms of cost savings or quality improvements, we had a difficult time procuring a source of capital to help us implement these changes. I soon realized that without some source of working capital, the rate at which we could grow our business was limited. It was at this time that I began to talk with what I call
“money thinkers”, to see how other small businesses were cracking this nut. One day, Andrew Christensen, an uncle of mine who does financial planning, gave me a book that he had recently read on “The Infinite Banking Concept”, entitled Becoming Your Own Banker. Andrew asked me to read the book, and said that
he believed the ideas could prove useful to me in solving some of our business cash problems.