People with Capital

Most people live hand to mouth. All companies need capital to run their businesses. They can’t just rely on the equivalent of the work and pay-check cycle of employment. Some clients sign contracts, and great businesses have a way of developing sufficient client loyalty that they have a predictable stream of income. There are Capital light businesses but even they need enough Capital to pay the people involved. The payroll is the list of employees and how much they have to be paid. When things go badly, you still need to pay the staff if you want them to stay. No matter how good the business idea, the business needs a war chest that can get them through the challenging periods. The only thing that is certain is challenging periods. That is why so many businesses fail. A good business idea isn’t sufficient. Investing is about risk management as much as it is about creativity. The idea that people can live hand to mouth is an illusion whose time has passed. Risk management should start from the bottom up. With people, with capital.