When people tell me they can’t start a business one of the most common reasons I hear as to why is because they are in the process of getting out of debt.
Debt can certainly get in the way of your financial goals like investing in the market or starting your own business, there’s no doubt about that. However, plenty of people have built businesses while simultaneously getting out of debt. In fact, I have several colleagues who started businesses precisely to help them get out of debt.
The key to building a business while getting out of debt is to be smart about it. Because you have debt, you need to be a little extra careful because some of your money is already tied up. You also don’t want to get into more debt over starting a business.
In this article, we’re going to lay out some of the keys of building a business while you’re simultaneously getting out of debt.
Choose a business with low overhead.
One of the best ways to build a business while getting out of debt is to choose a business with low overhead. In other words, start building a business that doesn’t require a whole lot of money up front.
Fortunately, we’re living in a new economy where this is totally possible thanks to the internet. If you have a skill like writing, designing, coding or editing then you can start a business without spending a lot of money to get started. All you need is a website, an email address and a WiFi connection in order to start freelancing.
Keep your business as a side hustle for a while.
It takes a while for a business to get off the ground, that’s why it’s probably beneficial to keep your business a side gig for a while. At the very least, maybe you find a bridge job or a part-time job so you have some income to pay your bills while you build your business.
Here is where the business can help with debt pay off. If you’ve got your bills paid by your bridge job, any money you start making can go toward repaying your debt (after taxes, of course).
For a great book on this, check out “Hustle Away Debt: Eliminate Your Debt By Making More Money” by David Carlson.
Don’t get into more debt.
As a financial writer, I often see people who can’t get out of debt because they keep overspending. If you want to get rid of your debt and build a business simultaneously, you’re going to have to become more mindful of your spending.
This includes personal expenses and business expenses. In terms of personal expenses, keep it to the basics and use the extra money to pay off your debt. Maslow’s Hierarchy of Needs is a great resource to help with this.
When it comes to building a business, you really have to think before spending money on a website design, a course or the latest technology. Often times people end up spending far too much money in the beginning stages of their businesses, and it often leads them into a hole they can’t climb out of.
At the end of the day, it is possible to build a business while getting out of debt. By following these tips you’ll be better able to manage your debt while starting to make more money.