Starting a Business is quite difficult, but running it is a whole different ball game. Many Business have closed shop soon after opening their doors to customers due to debts. But, what leads to such debts?

Many business owners still abide by the misleading myth that startups must run on debt. While a cash crunch could lead you into borrowing, it’s possible for someone to make progress without having to owe the bank a dime or accumulating unnecessary credit card debt.

According to NerdWallet, the secret to staying as far away from debt as possible is by making tough decisions about your business. This includes going for long periods without making any real progress like moving into a new office or buying a company car or even paying yourself that lucrative salary you’ve always dreamt of.

The same principle you use in your personal finance like budgeting and saving is the same that you should apply in your business. In this guide, you’ll learn how to run a business debt-free and how to get your business out of debt.

You Don’t Need Debt to Start or Run Your Business

It may seem absurd and impossible at first, but it’s very practical. Here’s why. First off, you can start your business with as little as $5,000. Later on, as the business grows, you can seek advice from financial experts to predict your cash flow for a certain period.

Also, you don’t need credit cards for online purchases, expense tracking, and travel payments. Instead, you can use a debit card to pay for expenses like these. For expense tracking, a simple accounting software will do fine, and it won’t charge you 18% interest.

But what if you need to make purchases for large equipment? That’s where the debts come in. Right? Wrong. As a matter of fact, you can use these four ways to steer clear of debts in such situations:

  • Rent out office space or work from home. Office location might be important for your business. The store in the middle of the action will bring in new business, but what if it’s draining all your profits? You can always work from home or rent out office space in a cheaper area until you have the financial ability to move into the dream location.
  • Outsource services. You don’t need to make large investments in printing services if you are a shoestring budget. Take a look around your business and identify services that you can outsource to bring down costs.
  • Secondhand isn’t that bad. First impressions matter. That doesn’t mean that you have to pull up in front of your customer’s house in a luxury car. You can achieve the same result by maintaining a secondhand car. The same goes for all other equipment, such as furniture or decorations.
  • Always pay cash. It doesn’t matter how long it takes, save up until you have enough to pay cash. Avoid the temptation of monthly payments.
    Scrutinize Your Numbers

Numbers never lie. If things aren’t working out in your business, chances are that the numbers will show you. Taking a closer look at the books will save you numerous headaches. Pay special attention to the following key areas:

  • Marketing. Marketing is vital to any business, but is it paying off?
  • Cost of production. Are there ways you can cut down on production costs?
  • Labor costs. How much are you paying in labor and salaries? Do you need all the employees you currently have?
  • Monthly expenses. These include utility bills, office rent, stationery, and other supplies.
    By going through these 4 areas, you can find ways of trimming out unnecessary expenditure. This move will help you get back on your feet.

Always Have a Budget


Budgets work wonders in keeping your finances in check. It doesn’t matter how big or small your company is, always craft a budget.

Many business owners shy away from creating a budget, but ignorance is no defense. Apart from instilling discipline, with a budget, you can identify wastes in finances. This will go a long way in helping you save for that much-needed expansion or improved service delivery.
At first, it’ll be difficult, but once you get the hang of things, budgeting will become second nature, not to mention that you’ll be on your way to financial freedom.

Sometimes, as a survey stated on realistic loans, the road gets tough and you’re forced to take a loan to keep your business running. That doesn’t mean that you can’t get yourself back on track, though. Here are a few tips to help your business going again:

  • First, you need to formulate a long-term strategy to get rid of debt. You can go for a 3 to 5-year period. During this period, allocate a certain percentage of the monthly profits to pay off the debts. While at it, get in touch with your lender and find out whether the debts can be repaid faster. If your business has had a stainless record, this will not be a problem.
  • Second, remember when we talked about making purchases with cash? Well, this will be your next step. While paying off your debts, set aside some profits for future cash payments and purchases.
  • Increase your business income. Introduce special discounts to your loyal customers, come up with a new service or product, or host an exclusive sale. All this is aimed at increasing cash flow in the business, which means that there’s more money going forward. You can then use the money to pay off the most pressing debts.
  • Call for help. If all this becomes overwhelming, you can seek the services of a reputable debt consolidation company. They will help you create a debt elimination plan and help you implement it.


Now that you understand what it takes to run a debt-free business, it’s time you started incorporating these simple tips such as budgeting and service outsourcing to trim expenses. If you’re already in debt, then you also know that it’s possible to salvage the situation and get the business back to its glory days.


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