STAR*TEcH
March 1996
Journal
,----------7
Tech Librarv
1
1
: STAR* TECH Journars
Tech Library comes
1
I complete with every
I
service manual
I
published.
:
I
I
I
SAVE OVER
FYI
Renewal Time?
Your subscription expiration
date follows your account
number located on the top
line of your mailing label.
Renewal notices are sent 3
issues in advance.
~
~
STAR* TECH Journal neither
operates, distributes nor manu-
factures coin-operated equip-
ment. It's sole purpose for being
is to compile technical and
informational data considered
valuable for dissemination to its
paid subscribers. Comments or
suggestions pertaining to this
service are always welcome.
~
~
SURFING THE
INTERNET?
VISIT STAR*TECHJOURNAL's
HOME PAGE ON THE
WORLD WIDE WEBB
http://www.cyberenet.net/-startech
STAR*TECH Journal can be
reached through the "Information
Highway" also known as the Internet.
Leave email addressed to:
I startech@cyberenet.net
I
KEEP IT POSITIVE!
1
1
25%
l_For mor'!..l,nformation see_p_a_E! 23j
1
CASH FLOW IS KING
John Lotz
Betson Bullet
Buena Park, California
Sometimes the better business is,
the broker you get. This is really
called negative cash flow. If you
are investing in good long term
earning equipment Uukeboxes,
telephones, cranes, redemption
equipment, large sit down games,
etc.) you are looking at a nice fu-
ture income stream. When busi-
ness conditions are changing and
you are going in a new direction,
very often you need financing.
People become fearful of financ-
ing because they believe they are
gambling or taking unnecessary
risks. Opportunities to grow gen-
erally require capitalization of
new equipment. Where compa-
nies really get in trouble is by not
managing their debt service on
these new purchases.
If a new piece of equipment cost
you $2000 with freight and tax
and it nets you $40/week, that's
$2080 the first year. You've bro-
ken even. If you have financed it
for one year, you've probably
experienced cash flow problems.
Why? Because there are always
hidden costs (extra labor, paper-
work, interest, etc.).
When purchasing solid long term
equipment it is wise to "stretch it
out" to where you have a posi-
tive cash flow. On the example
item, 18 months would have
been better. Sure, you pay a little
more interest but you're not pay-
ing out more than you're taking
in. If you positive cash flow be-
comes to large, then pay cash for
some equipment. In doing an
analysis of a new venture, give
yourself plenty of cushion.
There's nothing worse than get-
ting in a position of not being able
to pay your bills, even though the
enterprise is very profitable.
Now don't get me wrong; we're
not advocating long term financ-
ing on fighting games or other
volatile pieces. Six months
should be maximum on kits on
standard "games". These games
have a much greater slope in
their earning curve.
Don't be afraid of financing or
leasing. Understand this: Paying
interest is not a crime, it is a tool
to help companies recapitalize
their businesses. This is not the
same thing as getting into debt
for consumable items. This is
capitalizing income producing
equipment.
Remember: cash flow is king. _
Keep it positive!