Bridger PenningtonFund Launch & Investment Expert

How Businesses Run Ponzi Scheme Without Even Knowing

11 Jan 2023 · 1 min

Watch on YouTube

0:45

Many business owners accidentally run Ponzi schemes by using new client fees to cover old client costs and personal spending. When payment processors shut down or refunds spike, they can't deliver services because they have no cash reserves. The fix: keep enough money in the bank to cover what you already promised.

Chapters

A lot of business owners run Ponzi schemes and don't even know it. Now, the simple definition of a Ponzi scheme is where you need new customers or new investors to fulfill or pay out on old customers or old investors. So for example, in a coaching group, you sell coaching, you sell a bunch of clients. A lot of young entrepreneurs will take that money back. Hey, we got these new clients, let's go spend it on jets and vacations, all this fun stuff. And we have to keep selling new clients to fulfill on old clients. And what happens is if their merchant account, their Stripe or PayPal gets shut down, or they get a bunch of refunds from clients, they don't hold enough in cash reserves to fulfill on clients for the next 12 months. So my advice to you, if you're running a service company, do not run a Ponzi scheme.