Dave Ramsey shares some valuable information about starting your business.
I would echo his warning against using a credit card to finance your business – not a good idea. If you don’t have the cash to get started, well… it’s not the right time for you to start. Have enough cash to pay off those credit cards in full each month and never carry a balance.
I Want to Start a Small Business!
It sounds great, doesn’t it? – starting your own business, maybe from home, so you can be in control of your destiny, have flexible hours and no control-freak boss. Unfortunately, it’s not as simple as that. Small business owners work unbelievably hard, and even hard work doesn’t guarantee success. According to the Small Business Association, only two-thirds of small businesses survive two years.
There’s no magic formula to making a business work, but here are a few tips to get you thinking in the right direction:
Love what you do!
What would you do if money and time were not factors? What do you have a passion for? According to Success magazine, the entrepreneur is the only one who can go from sheer terror to sheer exhilaration and back every 24 hours. It’s a roller coaster ride, so you better love what you’re doing in order to survive it. That doesn’t mean you won’t have bad days if you’re doing work you love. I have days when I want to throw up my hands even though I love what I do. But if you don’t love it and are just doing it for money, it won’t last long.
Save up. Don’t borrow.
Start your business debt free with an emergency fund in place. It’s easier if you can start part-time and get the kinks worked out while you still have other income. If you’re going to quit your job and walk out, you definitely need substantial savings. You have to think about how long it will take from starting your business to the time money will start rolling in and plan accordingly.
NEVER use credit cards for a business loan or to float you through hard times. It’s a good way to cause your business to fail. Saving up for purchases is key – pay with cash. Make sure your business can pay its own way. Don’t go out and purchase a bunch of new equipment and supplies in hopes that the business will succeed. Start off small.
Do your homework.
If you want to be skinny, talk to skinny people and see what they do. If you want to open an eBay store, talk to people who have successful eBay stores. Talk to people who have started similar businesses, read about the industry, and do some research.
Nearly 15 years ago, I started my business – debt free – on a card table in my living room. We’ve never used debt, and now I have more than 200 employees in a building I purchased with cash. It takes time and hard work, but it’s worth it!
Source: Dave Ramsey newsletter