According to everyone around you, debt is normal. The average American household owns $139.5 thousand in debt. School and housing loans make up a large chunk of that number for each person.

Even if you’re not among the highly indebted, as an entrepreneur, you’re told to spend. Even if you don’t have the money, you’re supposed to miraculously attract customers with outbound marketing, SEO services, and expensive video production equipment.

At every turn is the temptation to go into even more debt. While some debt might be unavoidable, there are ways to handle your debts in such a way as not to drown.

1. Destroy Any Other Previous Debt

If you’re already drowning in debt, it may not be the time to invest money in a business. If you’re hoping for a business loan, you need to have good credit.

Most people are only in the “fair” range (on average, a 695 credit score) when it comes to their credit. You’re not going to get a business loan if your credit isn’t excellent.

The first step? Check your credit score. Most banks give you a running estimate of your credit score. And you can get an official credit report from two agencies once a year.

This report is detailed. You will understand where you have the most debt and how to fix your score.

Create a plan to start paying down debt as fast as possible.

2. Be Wise About Your Loans

In 2008, foolishness got a lot of homeowners in trouble. They bought into variable loans because the interest rate was so low. But once rate skyrocketed, they could no longer afford their homes.

If you don’t do your research before going into entrepreneurial debt, you could lose all you’ve worked for. It’s easy to settle in a decision. You go to a lender, they say “yes,” you feel you’ve won, and you come away with a crummy loan.

There is a reason nearly half of all businesses fail. They take on too much debt or they take on the wrong debt. And even if your business fails, guess what? You’re liable for that debt no matter what.

It’s like if you take your pet to a veterinarian for an emergency and your pet dies. Do you think the vet is going to just forgive your debt? Nope. Same with the bank.

3. Always Consider Other Options

Ask yourself, do you really need to start your business this very moment? If the answer is “no” then why not save up the money rather than have to pay it back?

Some might say, “well, I’m miserable in my job and I want to launch out in a venture.” That’s fine, and if you’re miserable, please quit. There is no reason you should feel trapped in a job ever.

But in the meantime, between when you quit your job and when you launch your venture, there are ways to stay happy, motivated, and avoid massive amounts of debt.

I have a friend who quit his job and started a game design business. He found people willing to fund his passion without string attached. Eventually, he launched a successful Kickstarter. He’s now traveling the country and going to conferences.

It’s entirely possible to start a business without debt. You just have to be creative and patient.



By Ben Mattice

Benjamin Mattice is a freelance writer/editor, horror and sci-fi writer, SEO and affiliate marketing newbie, dog wrestler, cat wrangler, capoeirista, and long distance runner. He lives in the Palouse with his wife, three dogs, two cats, and two rats. Yes, that would probably be considered a mini-zoo.