There is a razor-thin line between using debt to accelerate your business growth and crushing you.
I just released a new YouTube video diving deep into this topic.
There are two types of debt: smart debt, used to acquire cash-flowing assets & dumb debt, to consume goods & services.
I personally guaranteed $14M of smart debt over the last 8 years. That debt has enabled me to build a massive company.
In the video, I get into the details of three types of smart debt I used:
- Bank loan to acquire my first shops
- Equipment loan to open a new location
- Seller financing that opened a new world
Advice for New Business Owners
Be very cautious as a brand-new business owner.
There are a lot of unknown factors and you don’t have the experience running a business. Reading all the books in the world don’t compare to actually doing it.
Start slow and build.
Focus on driving sales and running a profitable business.
I signed my first business loan in 2016 and waited two years until I took on more debt. By that point, the business had stable cash flow and I was confident in our ability to repay it.
Seasons of Business
There are distinct seasons in business.
A couple years ago I was in a “spring season” of growth. We were taking on all this debt and pouring all cash flow into the business.
Today I’m in a “fall season” of harvest. We are paying down debt at an accelerated rate.
Last month we paid off $240k of debt at 4%.
Was that mathematically the best decision considering we’re earning over 5% in our money market account?
No, but I don’t care about the interest rate spread. For me, less debt means freeing up a little more space in my mind — which is worth 10X.
There Will Always Be More Deals
Debt is a powerful weapon. Just be careful.
There will always be more deals.
In the meantime subscribe to my YouTube channel if you haven’t already. I’m putting out new content every week to help you make money by owning franchises.
If you have any suggestions for videos I’m all ears! Just reply here.
Cheers!
