The Wealth Spa

Savvy Debt: Using Other People’s Money to Grow Your Business

Posted on 02. Sep, 2008 by Elizabeth Potts Weinstein in Finance

Guest post by Melanie Benson Strick, Million Dollar Lifestyle Business Coach.  

How much debt do you have? That’s right, I’m just going to come straight out and ask. Is it $10,000? $20,000? $50,000? More?

And how did you get that debt? Investing in your business? Or was it buying TVs and traveling to Fiji? Chances are you obtained most of it while making purchases for your business like computers, coaching programs, and marketing tactics to help you grow. While you might refer to this as debt, it’s called leveraging Other People’s Money (OPM.)

Whatever you call it, the most important question is: How do you feel about that debt?

Do you feel worried? Lose sleep at night? Have a pit in your stomach that doesn’t go away? Excited?

Actually, debt is a just a tool.

The reality is that more than 60% of service-based businesses are built from credit-card financed start ups. Many of these business owners quickly find that they have under-estimated their start up needs and realize they need more money to grow quickly. With their credit cards maxed out, the entrepreneur begins to hold back from investing in much needed marketing, mentoring and resources because they don’t want to be irresponsible.

When you hold back, the life flow gets cut off (think stepping on a garden hose) and the inevitable happens. Your business growth stagnates, or worse yet, the business fails completely.

The reason: Many of us when we go into debt, we get into fear, and stop growing. We make up a story about debt based on other people’s beliefs and they have a disempowering awareness of how to leverage other people’s money to grow your business.

John Mackey, founder of Whole Foods, was interviewed in a CNBC series last year where he revealed that to start his company he borrowed money from family and friends. After the $10,000 he borrowed ran out, his father-in-law chastised him for being irresponsible and going into debt. John had a vision that was bigger than the immediate debt – he had a dream that he had to fulfill. Today the successful grocery chain has $10 billion in annual revenues and 300 stores nationwide.

If John had bought into his family’s beliefs about debt, Whole Foods organic health food stores would never have come to the masses.

Not too long ago a good friend of mine who has a multi million dollar company revealed that he has quite a bit of debt right now. It’s a number that made me squirm. When I asked about the strategy here is what he said:

“There is good debt and bad debt. Leveraging other people’s money 
to grow your business is a solid business strategy. 
It’s people’s beliefs about debt that makes it an issue.”

I guess he’s right. Think Donald Trump. Do you think he leverages other people’s money to grow? You bet. So do the most successful entrepreneurs on the planet. The problem is that most people get very emotional about the debt and emotionally “check out” because they don’t have a strategy of how to manage or reduce the debt. Here are some suggestions that might help on how you can leverage other people’s money to catapult your business forward.

Melanie Benson Strick, The Million Dollar Lifestyle Business Coach, teaches entrepreneurs how to stop feeling overwhelmed so they can create more money, more freedom and more prestige. To find out how close (or how far) you are from the ultimate lifestyle business, take the Fr.ee Ultimate Lifestyle Business Quiz.

© Copyright 2008, Melanie Benson Strick and Success Connections Inc.

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Tags: borrowing, business growth, debt, Finance & Debt, Financing, Guest Blogger, leverage, start ups