Tips for Managing Small Business Finances Part 3: Don’t Fear Debt

Growing your business means making smart financial decisions. And basic accounting 101 will tell us that taking on new debt is not necessarily a smart financial move. We’ve certainly all heard stories of companies getting too far into the red and not being able to climb out.

There is, however, an exception to this rule when it comes to investing in your business. Taking a calculated leap in the form of securing small business loans may be the only way to grow your business into what it truly can be. 

As you evaluate your business’ overall financial position and strategy for future growth, there are a few golden rules to keep in mind. First, don’t forget to pay yourself. Second, invest in growth. And third, don’t be afraid of taking on debt. (You’ll have to stay tuned for our fourth tip on invoicing).

Tip #3: Don’t Fear Debt

Debt has a way of striking fear in even the most financially savvy of business owners. And for good reason. Being saddled with debt can come with very real consequences for your business, and if for some reason it were to fail, you would still be left to pay off your debts. 

However, there is also such a thing as good debt, and it is debt you may very well need in order to get your business off the ground and humming right along. 

Without the influx of capital you need to purchase new technology, equipment or even grow your team into one that can help you scale your business, it could take an awful lot longer to achieve your goals – if you are able to achieve them at all. 

While you need to be smart when taking on debt of any kind, it shouldn’t be something to fear. On the contrary, it should be an important component of your overall financial strategy, especially as you launch your business. Just be sure to maintain good business credit while doing so. Be wary of loans with high interest rates, and only take on debt that you can stay on top of and quickly repay.