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Chris LoCurto

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February 29, 2012

Borrow Money To Start A Business?

February 29, 2012 | By | 26 Comments">26 Comments

Borrowing money for business is as old as time. Or at least as old as the first time someone did it. Whatever. Either way, it’s one of the most-asked questions we get about starting or expanding a business. There’s no way you can start or expand a business without debt … Can you?

And while I don’t know if I’ll ever see this myth put to rest in my days of enjoying vanilla lattes on this planet, hopefully I can dispel it for those who follow me. YES, you can run, start and expand a business debt-free! Don’t believe me? Check out the data from the most recent U.S. census on the amount of money needed to start a new business.

  • 1% needed $1,000,000 or more
  • 14% needed $25,000-$999,000
  • 34% needed less than $5,000
  • 26% did not require any money at all!

(SOURCE: “48 BUSINESS IDEAS” BY DAN MILLER)

If 60% of new businesses can start on less than $5,000, so can you. What’s the difference in starting debt-free than with debt? You don’t start at the size you want, which, by the way, is better! You grow at the rate that God wants instead of the rate that you want—keeping the mistakes down that borrowed money magnifies.

Start small and debt-free. Do everything you can to create revenue and pour it back into the business. That way, the blood, sweat and tears are from hard work instead of stressing over your bank loan.

Question: How does understanding the numbers effect your decision to start a business? 

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  • http://www.crystalimagesinc.com/desk-name-plate1.html custom desk name plates

    it’s true that in my accounting/auditing profession, it is paramount to possess the appropriiate skills/ savvy to initialize the firm on our own. Money is not a high necessity. Thank God; Knowlege is the capital in my profession.

  • http://www.epreferreds.com/ preferred stocks

    I’m proud to say I started my business debt free as well. MaryBeth and I were just discussing that tonight as part of a conversation about the number of small businesses in our neighborhood that have closed since we moved here.

  • http://uma-maheswaran.blogspot.com/ Uma Maheswaran S

    It’s true that in my accounting/auditing profession, it is important to possess the right skills/ experience to start the firm on our own. Money is not a high necessity. Thank God; Knowlege is the capital in my profession.

    • http://www.ChrisLoCurto.com Chris LoCurto

      As it should be in most.

  • http://www.ginasmom.com ginasmom

    Confirms starting a business is a brilliant idea, but financing it is not. Also confirms that the startup capital has nothing to do with the success of the business.

    • http://www.medicalaccountsolutions.com Misty Gilbert

      Great recap ginasmom!

  • http://www.bluebridgecomm.com/ Joel Fortner

    Just read everyone’s comments. So awesome! I’m proud to say I started my business debt free as well. MaryBeth and I were just discussing that tonight as part of a conversation about the number of small businesses in our neighborhood that have closed since we moved here. Unfortunately so many business owners start with great hopes and aspirations and then they’re not able to make it work and they’re left with debt or bankruptcy. So sad.

    • http://www.medicalaccountsolutions.com Misty Gilbert

      Way to go Joel!

  • http://twitter.com/mkokc Mike Koehler

    I also started my business with no debt – just a new computer (paid with cash), a website (built by a friend) and some business cards (Vistaprint haha!) Since then, I’ve been able to cashflow improvements to my brand, hire staff (on commission!) and interns (free!)
    It helps to have a plan, a wife (who keeps talking me out of leasing an office) and lots of prayer.
    It’s best to grow as your client base grows, instead of building something big that is never filled up.
    Thanks for all you do Chris.

    • http://www.ChrisLoCurto.com Chris LoCurto

      Mike!!! That’s awesome man!! Thanks for sharing that

    • http://www.medicalaccountsolutions.com Misty Gilbert

      Congrats Mike! Stories like this encourage others.

  • http://www.indueseason.net skottydog

    I keep hearing Dave’s voice over and over in my head saying “grow your business ORGANICALLY”. We are doing a little at a time for our side work, paying in cash as we go.

    We are scheduled to be in Dave’s lobby with my family March 30th, so we’re newly debt free and have to balance staying that way with paying cash for editing, publishing, cover design, and more for my ebook.

    The last thing we want to do is have a new debt weeks before our claim to having no debt!

    I would rather delay the book than go back into the red. We’re not going into debt for ANYTHING ever again. Never again shall that happen in this lifetime.

    We intend to scream debt-free as a family next month, and then again hopefully in a few years when we pay down our underwater-Sarasota mortgage!

    There will NOT be a third debt free scream!

    • http://www.ChrisLoCurto.com Chris LoCurto

      AHHHHHH!!!! That’s awesome!!! I wish I was going to be there then.

      • http://www.indueseason.net skottydog

        Bummer. Well, at least we can meet up at Entreleadership in a couple of weeks!

        • http://www.ChrisLoCurto.com Chris LoCurto

          Absolutely!

    • http://www.medicalaccountsolutions.com Misty Gilbert

      Keep up the good work skottydog! We EntreLeaders are here to support you!!!

      • http://www.indueseason.net skottydog

        Many thanks! The support is welcomed!

  • cabinart

    There were many times in the beginning of my art career that I thought if I only had more money, I could produce more things to sell, primarily more cards and reproduction prints. Even so, I still have an abundance of inventory. Occasionally I look at a print edition from many years ago and just put the whole thing through my shredder because I draw better now!

    Sales of both cards and reproductions have dropped drastically since the ’90s, and I am so thankful I am not stuck with debt.

    Thank you for the reassurance that I have been growing my business at the rate God intended.

    • http://www.ChrisLoCurto.com Chris LoCurto

      Great perspective Jana!! Sometime going into debt can leave you with unused inventory. Good stuff.

  • http://www.grumpylobster.com/ Jake

    Couldn’t agree more with this post! I’m starting my own business off my personal computer and iPad, much less thank $5k and debt free!

    • http://www.ChrisLoCurto.com Chris LoCurto

      Way to go Jake!!!!

  • http://www.lifeofasteward.com Loren Pinilis

    I think as technology progresses, it will only get cheaper and cheaper to start a business. It’s getting to the point where all you need is a computer and internet access.
    And I’m one of the ones who started a business with no debt!

    • http://www.ChrisLoCurto.com Chris LoCurto

      I think you’re right. And let me say well done sir!!!

  • http://www.medicalaccountsolutions.com Misty Gilbert

    Those numbers are pretty incredible!

    I can vouch that it can be done and that I am in the bottom percentage bracket…I started my business in June 2004 with no debt and continue to run debt free. That means we (as a company and my team) do not have the latest and greatest gadgets. That means we do without many times when we might “want” or even “need” something, we find a workaround. We make the business operate on less than we bring in consistently. It means I don’t have stress of if a client doesn’t pay me that I can’t pay my bills!!!

    • http://www.indueseason.net skottydog

      “want” vs. “need”. Great line.
      Works in the world of business, not just with my toddlers!

      • http://www.ChrisLoCurto.com Chris LoCurto

        HAHAHA…yeah, can’t help ya there.