Do we really go for the holiday in EMI ?

Newsbharati blog    23-Apr-2020
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At the moment one has to really assess the situation and take a call. This is a time for a more conservative approach in managing ones finances. No amount of adventurism is advisable. I suggest one should spend on a holiday to the extent his own purse permits rather than adding one more EMI repayment to his financial commitments. The job market is seen to be a bit uncertain for some time ahead. Business environment also will be subdued in near future. So if your rate of return on savings is more than the interest rate on holiday EMI then you can definitely opt for the same.
what are the areas where we should expenses or cut them ?
A businessman needs to bifurcate his expenses on the basis of the importance.
  • · There could be some expenses without whom one cant run the businesses. These essentials are A category expenses. Material, labour, rents, salaries, utilities, etc. are some of its types.
  • · There could be some which add some extra value to the business but are not essential. These desirables are B category. These include advertisements, sales promotions, etc.
  • · The last one are those which are not even essential but are incurred for considerations more than just business. These luxuries are C category expenses. These include sponsorships of events, etc.
In these difficult times highest importance has to be given to the essentials. There too one can re-negotiate the terms with the suppliers and obtain better rates for cost saving. Further, critical make / buy decisions should be made based on marginal costing techniques. These will add value to the business and make you more competitive. As to the desirables, the focus should be on the minimax principle. Try and achieve the maximum benefit by spending the minimum. In good times a general advertisement is a good idea as it also helps brand building. But in such trying times, targeted advertisement campaign using digital marketing powered with artificial intelligence would be a winning idea! As regards the luxuries, one needs to possibly stay away from them at the moment!!
My classic confusion should i put my own money into business or get loan in this situation ?
The idea of financing for business completely rests on the concept of leveraging. One needs to leverage ones business with the right mix of debt and own funds. Simply saying if your own funds can earn you more than what you earn from the same being in business, then what would you do business for?!! Try and maintain a balance among the both and maintain a healthy debt equity ratio of 2:1 which is optimum in most of the industries and sectors.
Every month i take out some money from my business as salary being CEO should I do this in this corona affected period ?
Even if you are not taking it out from the business, then still you are paying TDS on it. So very well take it and then reintroduce the same into the company and earn interest on it! For the working capital gap go for cash credit so that the business has adequate funds to run itself.

Ranjit Nitu 
 Ranjit Natu 
Ranjit Natu is a practising Chartered Accountant and Partner in Taxation & Outsourcing in M/s. Natu & Pathak,Chartered Accountants. 
He is also the independent Director of PNG &aSons Limited, GoldenSparrow Finance & Treasury Pvt. Ltd., as well as Penosh Transport Pvt. Ltd. and Penosh Finance Pvt. Ltd. A member of the ICAI since 2003, he has been awarded critical responsibility including appointment by the Maharashtra Government for financial investigation in the Telgi Fake Stamp Paper Scam case as a part of the Special Investigation Team (SIT).
He has been actively involved many social activities more prominently that of Vishwa Hindu Parishad and successfully delivered duties on various responsible positions. He is also one of the conceptualisers and a founder trustee of Niramay, the flagship social service project of VHP, Pune. Besides this , Mr Natu also serves as the first Inter-National President of Hindu Helpline at the moment along side Executive Council member of the Poona District & Metropolitan Badminton Association since many years and currently its Hon. Secretary.
Mr. Natu's impressive dossier also outshines with his earlier poisions as Managing Committee Member of Maharshi Karve Stree Shikshan Sanstha, Managing Committee Member of Shikshan Prasarak Mandali, Trustee on various trusts such as Hindu Helpline (Ahmedabad), Explore Kashi (Ahmedabad), Art &; Culture Council of India (Ahmedabad), Niramay (Pune), Poona District & Metropolitan Badminton Association (Pune) & Janajagaran Prakashan (Pune), Managing Committee Member of Shikshan Prasarak Mandali, and the Founder Secretary of Indo-Israeli Friendship Forum .and Hindavi Swarajya Mahasangh.