Running a business while accumulating no debt requires planning and hard work. And while a debt free business may seem like an impossible task, I am here to tell you that it is worth every hard decision that will inevitably come! This means that you might have to build slow. You will have to say no to some business ventures, but the payoff in the long run is worth it! I purchased my first DSLR the summer following high school graduation. I never considered taking out a loan to cover the camera because I didn’t like the idea of owing someone. That simple line of thinking has saved my business over ten thousand dollars of debt simply from interest. Today, in an effort to save you money, I’m sharing the 4 reasons you should run your business debt free!
FREEDOM FOR BUSINESS ENDEAVOURS - In the beginning, you are going to be telling yourself no a lot. No, you don’t need that candle for your office if every penny is going toward a new piece of equipment. No, you don’t need the cutest desk from Anthropologie if every penny is going toward marketing for new products. You want to say no now so that you can say yes to opportunities that will make your business more profitable in the long run!
I am going to tell you something important: saying no to stuff is different than saying no to freedom. The financial freedom that I am talking about involves last minute flights out of state or across the country to kickstart a new business endeavour. This freedom means that your business savings doesn’t go toward debt! Your business savings will go toward making your business more profitable!
If I was covered in debt, I wouldn’t have been able to spend 2 weeks away from the office filming the Delight Video. I wouldn’t be able to shoot film for editorial and inspiration shoots. By saying no to debt, I have been able to build a profitable business. And shoot film.
CUTS DOWN MONTHLY EXPENSES - So you already pay for your domain name, website hosting, taxes, client gifts, paper products (business cards, thank you cards), office supplies, and the list goes on. You probably already know this, but you don’t need an additional bill for each month.
IT’S NOT GOOD DEBT - It’s been said that education and home debt are the two types of good debt. What do people mean by good debt? They mean that, generally speaking, you are going to earn it all back and be more profitable because you took out the loan. This is not true with business.
We all have grand ideas when it comes to business. We want our businesses to be profitable or we wouldn’t be putting in all the time and effort to see an increase in profits. But there is no guarantee that our business is going to work. It doesn’t matter if it looks as though your industry is going great. Your business is unique and it belongs to you. Which means that you are the one who will still be paying off debt if the business tanks. Don’t do this to yourself.
Even the larger companies like Anthropologie operate under an educated guess when they are developing new products. They have no guarantee that they will see profit from a new line.
BUSINESS FINANCIAL GOALS - Are there things that you really want to do for your business that will spur on profits? Maybe you want to brand yourself with a professional designer or you need a new website. Maybe you want a new promotional video or you want to buy equipment or programs that will let you do something new with your business. Whatever it is, being debt free will allow you to tackle your business financial goals in a way that is profitable, wise and sustainable.
I have a list in an excel document of business financial goals for the year. Once I have the money saved, I know that I can tackle one of those small financial goals (like opening THE SHOP) or one of those bigger financial goals (like a destination inspiration shoot). I also keep a little cushion in the business savings so that I can jump at a time-sensitive opportunity that will propel my business forward.
Tomorrow I am sharing some of my business secrets on the blog: My Simple Approach to Running a Business Debt Free