Today I’d like to touch on a subject that most people don’t really talk about – the importance of growing your business debt free.
For those of you that know me, you know that I’m a Dave Ramsey follower (Remember when I got to MEET him!). That’s right, I don’t believe in having debt! Crazy idea, right? When you think about it, it’s really not that crazy…if you don’t know anything about Dave Ramsey, I highly highly highly recommend reading The Total Money Makeover. It has seriously changed my life, financially and spiritually. It’s usually less than $15 online but if you want a copy, just let me know and I will mail you one. That’s how much I believe in his philosophy, I will mail you a free book! I usually keep a handful of copies at my house and give them out to everyone who I believe will benefit from his teachings. If you really want to dig in to your personal finances, you should really look into going through Financial Peace University. It’s a 9 week class, usually held at local churches, where he teaches you how to handle money and live on less than you make.
Being debt free is not about paying off your credit card balance every month. It’s not about keeping a credit card “for emergencies only”. It’s not about borrowing money at 0% interest. And it’s not about worshiping at the alter of a the FICO score – You don’t even need a credit score if you’re not going to borrow money!
Being debt free is about cutting up those credit cards and paying everything with cash or a debit card. It’s about YOU owning everything you have and not the bank or American Express owning your life. If you don’t have the money, you don’t buy it! It’s that simple. The same applies to business finances. This very basic idea has transformed how my business has grown. When you don’t have payments hanging around your neck, you can make better and more sound decisions about your business. You can breathe and focus on the parts of your business that are important and will set a good foundation for future success. It may have taken me a lot longer to save up and pay cash for my photography equipment, but the peace of mind that I had knowing that I owned every part of my business, was priceless. This method teaches you to be disciplined with your spending. It teaches you to do tons of research before buying stuff. It makes you ask the question, “Does my business really need this? Or do I just want it?”.
Your business will likely have to grow slower and you may have to start out doing it part time, on the side, so that your day job can pay your bills. You may have to work 12-15 hour days, but I would rather have the stress of working hard to accomplish my goals than the stress of worrying about paying my bills. A lot of small business fail because they try to grow too big, too fast. When it all comes crashing down, they only have a mountain of debt to show for it. Overall, the pros greatly outweigh the cons when it comes to growing your business debt free.
Amy and Jordan Photography have a wonderful series on their blog that talks about how they made the leap from a regular 8-5 job, to chasing their dreams and becoming full-time photographers, all while being debt free. They really dig in to how to make the transition wisely. You need to pull the boat up to the dock before you hop in, right?