Capital trumps credit

The common element among struggling businesses, under-water homeowners, stressed-out banks and investors overcome by margin loans is too much credit and not enough capital. For some strange reason, everyone seems to have equated cheap, easy credit with capital. They are not the same.

Capital cannot be borrowed; it must be earned and saved. Credit comes and goes depending on the whims of lenders – it is neither stable nor permanent.

Capital is both plentiful and scarce at the same time. Owners of capital will only invest if they perceive an opportunity for above average returns. If your business focuses on unmet customer needs with a product or service offering above-average value and potential for profits, the necessary capital will be available.