Considering the final results the right hand side of the
graph, we can see that over time the savings can be huge.
Enterprise Debt™, like any debt, is not inherently a bad
thing though. Used correctly it is a massively important Strategic Management
tool. But like any debt, Enterprise Debt™ is only bad when:
It is hidden and you don’t know you are incurring it
You don’t know how you will pay off the debt
You don’t know the interest rate
You don’t know how long you will have to pay the interest
…all of the above.
When times are good, you can invest in reducing Enterprise
Debt™, which means when times are bad, you can lean on Enterprise Debt™ by
allowing a controlled increase.
However, if you do not expose and manage Enterprise Debt™
your Enterprise Debt™ could already be too high to allow you to ride out the
bad times. If you max out your credit card, how will you be able to fix your
car when the exhaust falls off?