I completely agree with Seth Godin’s blog that business owners shouldn’t worry about the pennies but rather make big-picture decisions.
BUT…how much debt is appropriate to incur for a startup biz? How much are you comfortable with as the business owner? And how much is too much – is indicative of a sure fall?
I’ve always believed that you must stand out from the crowd and TAKE CHANCES. Not a fan of sinking in the mud, though. It’s a tough line to walk.
Post-Script:
I emailed Seth Godin a comment this morning. He responded immediately and personally. Impressive. Here’s the conversation:
LMS: Hi Seth, I’m an avid reader and fan and I went to comment on the Pennies & Dollars blog – but can’t find the place to comment. So I’m emailing you instead.
Here’s the point – it’s easy to say spend the money and the money will flow, but what if there’s limited funding in the first place? I’m a small business owner in doomsday
But the cash flow is not flowing exactly. Sure, I could hire the limo at the trade show – but then what? And how much of the line of credit is appropriate to use before it’s just too much? I’ve had very limited startup costs and remain nimble but I also don’t want to run up a mountain of debt.Thoughts?SG: it’s entirely possible that there’s insufficient demand, that there’s no fish in that lake.
in which case, you need a new lake, no?
LMS: Wow I appreciate the quick and original response. It’s a good point – but the geographical “lake” is one I’m stuck with for various reasons – perhaps it’s the intellectual or professional lake I need to redefine. Thanks.
SG: exactlythe internet is a very very big lake, no?
Question for you, dear readers: How are you innovating to surmount the economical obstacles set before us?
A wise man once told me “If you can’t reach in your pocket and pay for it…don’t buy it.” Debt sank the economy and it is not wise to get into debt- for any reason. It is good to live by the 80/20 rule ( or more if you can)- out of your net income- take 20% off the table and save/invest it. That way you only live on 80% of your net. Too many people were living on 100% or120% of gross income…and then the bubble went pop. Less is more.