Should I Start A Business If I Still Have Debt?

28 Sep Should I Start A Business If I Still Have Debt?

Starting a small business is the dream of many people. In fact, it is the backbone of our economy. Nearly 80% of our economy is made up of small businesses. I would further encourage a person to start a small business, because it is one of the most consistent paths to building wealth and having control over your own time. But, the question of the day is, should I start a business if I still have debt?

So the answer is “it depends.”

A large part of the decision depends on you and how you answer the following questions. So, let’s try to break it down into a few easy steps. This is a similar thought process that I went through when I had to decide.

1. Are you passionate about the business you want to start?
There is no need in talking about risking your financial stability for a business if you are not extremely sold out for it. I am sure you can make money for a period of time even if you’re not passionate about it, but really what’s the point?

2. Could I do something temporarily as a small business to get out of debt?
In direct contrast to my first point, some would argue that you could go wash windows or mow lawns and make more than a regular part time job. This is ideal, of course. Furthermore, if you pulled it off, I think it’s a great option. This leads me into the next question.

3. What’s your track record of of creating an income on your own?
People have different abilities and skill sets, so you will have to form a realistic view of what you’re capable of when producing a consistent income. Don’t go on your feelings with this question; gather tangible evidence of what you are able to do. This is important, because the longer you wait to get out of debt, the more it will cost you financially and emotionally.
When my wife and I first got married, I wanted to start a small business, but we had about $26,000 leftover in debt. I assessed that my small business skills were low and it might take years to build an income that would support us and pay off debt. That is why I decided to get a second job delivering pizzas. Fifteen months later we were out of debt, and I was on to building my business.

4. Can you start developing your business on paper while paying off debt?
If you decide it would be better to get a second job, or work some overtime to get out of debt, you do not have to wait to start developing your business idea on paper. Read books, talk to people in other cities in your industry, and get your ideas written down into some notes. Then, deconstruct those notes, and start creating a plan. Once you are out of debt, you can hit the ground running with your plans.

5. How would the ones you love answer these questions?
Unless you are married, it’s ultimately not important what others think about you starting your own business. It could prove to be a very valuable experience though, to have your loved ones evaluate you. It could be painful, but it’s better to have your ego hurt than go through a decade of financial heartache. In our situation, I determined that it would be better to get out of debt and have my wife on my side. It was more urgent for my wife to get our financial life straight first, than to endeavor into the unknowns of a business. I believe we are stronger for it today.
Lastly, I have assumed several things as I write these questions. The assumptions are you have resolved to get out of debt first and don’t want to start a business by getting into debt. If my assumptions are incorrect, well that’s another discussion for another time.

If my assumptions are correct, however, then these questions will get you started. Don’t take months to decide this either. I suggest two weeks max to make this decision. If you will be honest with yourself and take the time to answer these questions, I believe you will begin Finding Forward.

Tony Elam is a financial coach. You can find out more about him here

If you’d like to make a plan to start your own business, contact us at to get started.

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