My mother used to run a sari sari store. It's the easiest business to start yet some don't really succeed. You know why? MISMANAGEMENT. The start up stocks of my mother was purchased using my credit card. I told them that they will just pay me when they already have the money. I have four siblings and all of them are still studying at that time and my mom does not have a work. So there is no other income coming in. By the way, I'm already married with 3 kids. Anyways, the store sales were okay. The problem is, they use the money for my brothers and sisters school allowance and transportation expense. If they no longer have food, they get from the store without paying for it. The store was just like their extended pantry and stock room. By the end of the month, there were no longer items to be sold and no money to buy new stocks. They tried to ask me for another capital. But I told them that it won't make any difference because they will still do the same thing. I told them that they should not touch the store's earnings if they still want to continue the business. Or they can just get a portion of the proceeds but not everything because they need to replenish their stocks. Well, I can't blame them for doing those things. They have no other source of income.
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Well not that different from the credit crunch. It is surprising that people confuse revenue, profit and capital but I have met many well education qualified people who do.
Keep writing. There will be many micro-businesses start up in the next few years and they will need your help.
Hi Jo. Thanks for dropping by. I thought credit crunch is another personal finance blog. But when I google it, it is a term used when bank makes borrowing more difficult.