One of the most daunting four-letter words for entrepreneurs—particularly women entrepreneurs—is the word D-E-B-T.
Most of us have had debt, or are in it right now and desperately trying to get out of it. We want to grow our businesses, but we cower under “tough love” financial advice from advisors like Suze Orman.
I love Suze’s advice on investing, and I’ve had the pleasure of speaking on stage with her. But she got my goat when she recommended that aspiring entrepreneurs should build impeccable credit first, and save TWELVE months of operating expenses… BEFORE starting a business at all!
I surely didn’t wait to have all my ducks in a row before I started my business…
When I started my first little venture back in New York City in 1999, I was not only broke but in TONS of debt. My last job paid, but I realized it was a fixed income and I had no possibility of making more money until I went off on my own. I had no cash and no Plan B and my credit stunk. There surely was a bumpy period, and I was living day to day, but for me I knew I had to do this with my back against the wall. No other way out. Otherwise I’d still be right where I was!
And I’d still be right where I was if I focused all on my debt and saving.
What I did was create a plan to get myself out of debt, while focusing on growing my business. You need to do BOTH if you want to be successful, and the great news is, you don’t have to wait at all. Here’s how to get started today…
Key 1: Let go of guilt about your debt
If you want to take ownership of your debt, you have to come to terms with your current circumstance, and that means getting past the guilt and shame around it. Think of the time-tested weight loss advice that says to not beat yourself up if you fall off your workout or diet plan. This is because trying to make change from these low-energy places is usually a recipe for disaster. If you simply accept with no judgement that you are where you are, and you’re working to move yourself to a better place, it’s not only more motivating, but it’s more effective.
We can’t always control our circumstances. But we can very well control how we respond to them. Remember, you have a choice: YOU can stew in your mistakes and feel terrible, or you can take in the lesson that you’re being presented with, and honor it by responding in a productive way. Which sounds better to you?
Key 2: Get clear on the debt you have
This is usually the most difficult step, but getting clear on exactly how much debt you are in can be liberating! And, as crazy as it sounds, once this step is done, the fun begins. Because here’s where you step into a place of power.
Ignoring your bills won’t help you achieve wealth. When you take ownership, you stop blaming others, and you stop blaming yourself. So just face the numbers head on. The money is spent. You’re just getting clear on how MUCH was spent.
If you can’t manage the money you have, it’s unlikely the universe will bring you more. Your money management system doesn’t have to be complicated—a notebook, pen, and calculator can even get you started. I created a simple spreadsheet that listed my debts and used it to track paying them down.
Don’t be afraid to get help in this area if you need it. I used a credit counseling company in my 20s and early 30s, and it was a huge help in getting me back on my feet. If you need a good starting place, check out The National Foundation for Credit Counseling.
Key 3: Focus on your business while paying it down
What you focus on expands, so again I don’t want you to focus on your debt!
Set up and honor a plan to pay off your debts and bills, but put your focus on creating a positive and healthy net worth.
For starters, take yourself as a business owner seriously and pay yourself first. Write yourself a set paycheck every 2 weeks, as if you’re on the payroll. If extra sums of cash come your way—a tax return, affiliate commission check, some windfall—then use that to pay off your debt, or reinvest it in your business, like buying a course, or coaching program.
When you shift your focus to growing your business, and paying yourself first, magic starts to happen…
Remember money is simply energy that you give and receive. So don’t forget to allow yourself to RECEIVE the blessings of money that you’re earning for yourself. Receiving allows you to grow your business and grow your wealth.
Key 4: Use debt as a smart tool
When you are growing a business, there are certain opportunities that are worth the investment, and often worth some debt. BUT, here is the #1 condition where this makes sense: A good debt is when you invest in something that will give a return on your investment.
Remember, I was pretty much broke when I started my first business, and I was also in debt. After reviewing my options though, it still made sense to put my initial expenses on a credit card I did have some room on. It got me what I needed to start making money—business cards, a basic website, a printer/fax, and one good suit and a pair of shoes. I used an old computer that my younger brother gave me—it was a clunker, but got the job done for the time being. From there, I had to hustle.
Note: This isn’t about running around to 20 different seminars, buying a pair of $300 stilettos, and a new iMac and not implementing anything. You have to IMPLEMENT on your good investments.
If you sign up to work with a coach, be prepared to work. If you buy a new computer, use it to snag two new clients asap—make sure that what you invest in pays you back. That’s using debt as a smart tool to grow.
Question: how have you gotten out of debt while growing your business? And what do you use debt for in your business? I’d love to hear your comments below!
© 2012 Ali International, LLC
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