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A fantastic comment came in from the great Misty Gilbert:

“Chris, I do have a scenario recently experienced and am curious what you all would advise. I have a client (doctor) that has purchased a practice that has been in business 24 years. He is not out of debt and is not following The Baby Step principles. In fact, he has a very poor situation with bankruptcy 6 years ago.

I am setting up his practice from the ground up. I know none of this follows the “Dave Plan” but wondered how you would advise a business owner in regards to credit. How do you help someone when you have run into issues getting him a bank loan, credit card machine, vendor agreements, utilities when he has poor credit?

I know Dave would say he shouldn’t buy the business if he can’t pay cash for it, and he can’t. I know Dave would say operate the business without credit cards, and he won’t. Do you feel credit is a good thing in the business world? How would he establish these things with no credit? Maybe this can be a blog post?

For those of you who’ve been through our stuff, and have never run your own business, you’re probably thinking this is a silly question. But the truth is, this is a very common question that we get from business owners. When you step into the business world, you have a hard time finding people who are running a business debt free. They’re out there, you just don’t notice them until you start running your business debt free. Therefore, it seems reasonable to use debt to start and grow your venture. This, however, is a really bad idea.

All throughout the Bible it says that debt is either a curse or it’s something that a fool does. Nowhere does it differentiate between personal and business. Therefore, if you can’t run your business debt free, you shouldn’t be in it. “But how can anyone start a business then?!?!” Save for it. Yes, save money. Sixty percent of all new businesses start on less than $5,000. You need to work like crazy at what you’re doing until you save enough money to move into what you love. Plain and simple. “That’s great, how does it help this guy?”

Well, he’s already bought the practice, so he’s in. But from here on out he needs to run it like they did in the old days. Obviously he shouldn’t be getting any loans at all. He should have proven to himself that with the bankruptcy, debt isn’t the way to go. Instead of a credit card machine, he goes to an old carbon slider. If the issue with getting a machine is lack of credit, he doesn’t take cards right now; checks and cash. Or, get PayPal hooked up to a debit card. Vendors may have to be paid up front for a while until he earns their trust. It’s the same with utilities. You can do a turn on fee and first month’s payment. Is it tough? YES! But I can promise that the sweat equity will be way less stressful than the bankruptcy was!

The biggest issue, (by the way, this was a softball pitch by Misty, she actually knows the answer) is to actually plan for the future. Manage cash flow so you can actually have something to build a business with. Jumping in with nothing and expecting everything to work and make lots of money is an immature way of running a business. Adults plan and prepare. Seventy-four percent of the Forbes Four Hundred say that getting out of debt and staying out of debt is how they became successful.

Last year I started a real estate company with cash. No debt, and I only make moves that I can fund with cash. Plain and simple. There’s no business deal that could make me want to go back into debt. I trust God WAY more than I trust me.

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