5 reasons to avoid debt & interest in your Entrepreneurial Business

“Conventional” wisdom teaches business owners that paying interest is a “normal” business expense that you should expect to pay.  But, is that really an expense that you have to have in your business?  Learn more in this week’s blog.

Many people are taught and accept that borrowing money is just a part of business. But there are actually a number of reasons that you should avoid debt. Here are 5 of them. 

1. Interest on Debt reduces your cash flow. 

When you are repaying debt, you are voluntarily reducing your cash flow. The debt obligates you to make payments over a specific period of time. The interest you pay reduces the amount of money that you have as available cash in your business. 

2. Interest increases your purchase price 

Even if you get a great deal on your purchase, you negate that deal when you pay interest on the purchase. Even what seems to be a good discount gets eroded by the compounded interest you are paying over time. 

3. Debt reduces your control of your business 

In order to get a loan, you give up control of your business.  It could be just a lien on what you are buying or it could get much more involved, depending upon the lender’s terms.

4. Debt benefits the lender

The sales pitch makes it seem like you are the one benefitting, but make no mistake.  The lender is the one with all the rights and benefits.  You are working for them.

5. Debt takes time away from your business 

Whether it is time taken to visit the bank, meeting with the banker or preparing reports required by the terms of the note, debt doesn’t just take your money, it also takes your time.  That is time you don’t get to spend on your business.

Take these reasons to heart and stay away from debt.  It is not a normal business expense and it does not benefit you.  You don’t need to be a slave to the bank.

To learn more about cash flow and budgeting, sign up for my upcoming free online Cash Flow Workshop HERE.  I will email you when the next workshop is scheduled to begin as well as sending you a link to each new weekly post in the Budgeting Essentials Blog! I will be teaching my Cash Flow Workshop soon, so don’t miss it!

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God Bless your week!