A couple of weeks ago, one of my colleagues pointed out to me that one of the ‘big gurus’ was promoting a new high end program for entrepreneurs. Part of the big-famous coach’s sales pitch was “Going into debt for your business is an INVESTMENT.”
No, I thought. Surely this person had more integrity than that.
So I listened to the recorded call myself… and sure enough, it was said. Which now means you’ll be hearing hundreds of this guru’s wannabes saying it too, because now they also have to justify why they have gone into debt.
Here’s the thing: when someone says going into debt (ie. purchasing their high paying program when you don’t have the money) is good for business, it really is… FOR THAT PERSON’S BUSINESS, not yours. You’ll find that most of the people who say such things don’t really care about your success, but their own. As a matter of fact, I think you’ll also find those who do say such bullshit are also the ones with iron-clad contracts where you can never get out — even if you die!
And here’s the irony of it all! If you dig deeper, you may also find some of the gurus who are telling you to go into debt are the same ones who filed bankruptcy to avoid paying their own debtors. Yup, I remember one guru writing about how she was living the good life, sipping cocktails at the spa because of her great business, less than a month after filing for bankruptcy and screwing over a lot of my colleagues who had done work for her and never been paid.
So I want this myth of “going into debt for your business is an investment” to die before it spreads. If you hear a bad idea often enough, it becomes an accepted truth. And that can be the most dangerous thing for your business. So let me set the record straight with three myths we commonly hear:
1) You must to go into debt to grow your business. Just ask the founders of Apple Computer, Mattel Toys or Starbucks—all Fortune 500 companies that started with next to nothing. The truth is, according to the Census Bureau’s data, 60% of all small businesses opened in a given year need less than $5,000 to start. They don’t want to begin their dream saddled with huge debt. And bear in mind, most of these businesses have more upfront costs – such as buying equipment, stock, etc – than your average online business.
I personally started my business without even that much. I never went into any debt – and never will.
2) To invest in large purchases, you need to go into debt. Wrong again. With good budgeting practices, you can have some of your earning put aside to pay for bigger ticket items with cash. This is especially true since many now offer payment plans (as I do for Business Charm School).
3) Borrowed money is easy money. An investment makes you money, whereas borrowing costs you money. When you buy that $5,000 program on your credit card, you may end up paying thousands more if you keep paying close to the minimum payment on your bill, carrying the principal for months or even years. Borrowed money can be very expensive.
Look, I do believe in order to make a business succeed, you need to stretch a little. That may include financially, but it should not include debt. In fact, that is why you should be extra careful about what programs you buy for your business, because you want to have money available when you do need to make a significant investment.
I am so adamant about this, that at my live experience, Business Charm School in June, I am teaching how to get out of debt in your business, since so many business owners make this mistake. As a matter of fact, the first 10 who register will get a pre-event strategy session with me, where I show them how to get their ticket and travel expenses completely paid for. (Talk about making back your return on investment: if you do the work, you’ll have your money back BEFORE you come!)
Find out more at http://BusinessCharmSchool.com and learn how to grow your business on your terms without going into debt ever again.