Why You Should Never Start a Small Business with Debt
I know this is a controversial topic. And people love to promote using OPM or Other People’s Money. All that sounds well and good until you have to start paying it back when you haven’t even made a dime of profit.
Now, I get it. When you're fired up about a business idea, it's tempting to think any money is good money. But let's cut through the noise and get straight to the heart of it. Starting a business with debt can be a terrible idea, and here's why:
1. The Pressure Cooker Effect
Imagine starting your journey with a mountain of debt. That's not just money you owe; it's a ticking clock of stress and pressure. It's like trying to run a marathon with no training – you're setting yourself up for a world of pain. Debt means monthly repayments, interest piling up, and the constant stress of meeting those financial commitments before you've even made a dime. It's a pressure cooker that can stifle creativity and risk-taking – two essentials in the early days of any business.
2. The Flexibility Freeze
Debt can lock you into a fixed path. When your primary focus is on repaying loans, there's little room to pivot or adapt. But here's the real talk: business is all about adaptation. The market changes, new opportunities pop up, and challenges come at you fast. If all your resources are tied up in debt repayment, where's the flexibility to shift gears when you need to?
3. The Growth Grind
Growing a business takes cash – that's no secret. But if a big chunk of your revenue is going towards debt repayment, reinvesting in your business takes a back seat. This can mean slower growth, missed opportunities, and watching competitors sprint past you while you're still lacing up your shoes.
4. The Risk Rumble
Starting a business is risky, no two ways about it. But starting with debt? That's upping the ante in a high-stakes game. If the business fails, you're not just back at square one; you're in a hole, trying to dig your way out of debt. That's a risk that can have real consequences, not just for your business dreams but for your personal financial health too. (Trust me on this: I know all about this first hand and it’s the most frustrating and defeating thing EVER.)
Now, I know what you're thinking. "Gwen, are you saying never take on debt?" Not exactly. There's a time and place for strategic borrowing. But diving headfirst into debt without a clear plan is like trying to fly without wings – it's not going to end well.
So, what's the move, Money Getters? Focus on what you can control. Bootstrap, hustle, and be resourceful. There are ways to start small, test your ideas, and grow your business without chaining yourself to debt. It's about smart moves, patience, and playing the long game.
Remember, the goal isn't just to start a business; it's to build a successful one. And sometimes, that means taking the slow road, building solid foundations, and ensuring that when you do invest, you're doing it with a clear strategy, not just hope and borrowed cash.
Join me for the next Get Money Show where I dish on more secrets that help you get to the money fast.
