Let’s say you went $100,000 in debt starting a business, and it costs $5000 to operate every month and you make only $4000 every month for the first year.
But you have a house and family, etc.
Where is the money going/ coming from??
In: Economics
There isn’t an infinite supply of money just because you run a business. There is a really simple formula, profit = sales – expenses. But a particular business might not be profitable , but still have money to play employees, management and a dividend for owners.
The extra money can come from savings the business made during good years, loans or even selling partial ownership to other investors.
For example Apple famously has a massive cash reserve they could use that to pay owners (shareholders) a dividend. Or a cartography company such as navtech that was involved in the early days of building the road mapping database many gps systems use. They operated for years (decade?) before they had something to sell. Relying on loans and investor money.
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