Business Pitfalls of Leveraging
Avoid borrowing more debts than you can, which often results in job loss. It really becomes a big problem if you surpass your business, which means you have more debts than the company can afford. The impacted problem is what is fixed cost and that any fixed cost does not change with the activity of your business. Payment usually consists of a fixed monthly payment consisting of capital expense and interest. Variable costs, such as labor costs, staff burden and material costs, on the other hand, closely follow the activity of their business income. Greater commercial activity results in higher revenues, which requires greater workforce. The same goes for a manufacturing company, the greater the demand for your product, the greater the equipment needed to meet the demand. What is the demand for your products and services is lower, these are lower labor and material costs. However, fixed cost on the other hand will remain unchanged, even if the activity of your income is reduce...