Should I get into debt to start my business?

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It’s not uncommon in today's digital world that people are trying to find new ways to make money online, but they don’t always have their finances in place to start their own businesses.

If you’ve been considering bootstrapping, I have some important insights to share with you. As I share in today's video I was recently asked whether it’s a good idea to get into debt to start a business. If you have no savings or capital to start your own entrepreneurial endeavors, is it viable to borrow money and start a company under tough financial circumstances? Here’s what I believe.

Money Mindset
Drawing from personal experience, I’d like to say that there’s not necessarily one way to answer this particular question. I’ve had the opportunity to help many people start their first businesses, and one of the things I’ve seen working with a broad range of people is that everyone has a different mindset about money. Some people’s fear around money, for example, is much greater than others. They may tend to have much more stress about borrowing even relatively small amounts of money than other people.

Self-awareness
I would first recommend taking a moment to become self-aware of your level of thinking. If you feel you’re going to buckle under the pressure of getting into debt and that this pressure is going to shift your focus away from growing your business, I think you’re better off bootstrapping. However, it’s important to know that investment or capital will help you achieve your business outcomes much faster and much more realistically. Whether it’s buying stock for your company, outsourcing your support needs, or investing in a business mentor, you’ll need the capital to get your business going.

Know your Business
My advice to anyone who’s thinking of starting a business is to really know your business—the product or service you're selling, before deciding how much money you need to borrow or raise. I’m not talking about creating a long-drawn business plan but focusing instead on understanding the service you’re going to be providing. Identify the nature of the business, know your industry and get right down to the numbers.

Example: If you’re building an Affiliate Marketing business, determine how much commission you will be paid for each sale; or, if you’re selling physical products on your own ecommerce store, figure out your profit margins. Gather this information and calculate the your startup and approximate running costs before you think of approaching lending institutions to raise the capital you need.

Are Partnerships Right for You?
I’ve recognized that a lot of people do very well with the support of business partners. If you have a sound understanding of your business model and know that your brilliant idea is going to be a success, it may be helpful to look for a good business partner. Consider finding someone who shares the same values and brings more to the business than just capital.

Final Thoughts

Come up with a business plan you believe in and consider getting the help of a mentor or someone who’s achieved similar business outcomes to what you’re hoping to achieve. Calculate the capital you’ll need to get the business running and establish solid business foundations that will set you up for success.

If you have the confidence in a particular business venture and you have done your due diligence, you won’t find it as challenging as you may first think to raise the capital you require. There are always people and lenders who will; back a good business opportunity.

Make sure though if you do go down the route of borrowing money that you spend that money on something that’s really going to push your business forward.

If you’re working on starting an online business, check out our FREE Curriculum by clicking the banner image below. It has all the information you’ll need to start a business and help it thrive.

About the author

Oliver Ohene-Dokyi

  • websearch master says:

    Hello Stuart found your advice great. I do have one question about credit with PayPal. I recently found out that you can have credit with PayPal but you would have to meet their requirements but a lot of people say PayPal can treat you badly and that there are other payment processors but they make the process of a client buying from digital store so simple. Don’t know what to think.

    • Stuart Ross says:

      Are you looking to sell product with PayPal or buy?

      In my experience PayPal are not great to deal with. Stripe is by far the best way to take payments now.

    • websearch master says:

      I was looking to sell my digital products (plr ebooks) through PayPal as a payment processor because in people’s minds it’s been well branded. I also discovered that PayPal can extend you credit. But I am skeptical and hestitant about PayPal because there are even websites called screw-PayPal. So I do know…?

    • websearch master says:

      I am in limbo

    • Stuart Ross says:

      I wouldn’t worry too much about the websites. They are usually just bad reviews designed to deceptively get you to sign up with something else instead. However, there are absolutely legitimate complaints about PayPal. But there always will be with huge companies. PayPal will highly likely do the job just fine for what you need. I would not hold off if you have some good products to sell and would just get started. You can always swap later. I made my first income from my own products with PayPal.

  • MisterBassBoost says:

    Keep it up! Looking forward for more videos from you, don’t stop!


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