Having a Debt Free Business ~ Or Do You Really?

In 2008 I purchased the business I’ve had for the past 5 years. I was going to be one of the smart ones, I was paying cash. No financing for me. I sold my stock and bought my business. This was the fall of 2008. While sitting in a hotel room at the training for my new found bundle of joy, I watched as the stock market tanked right before my eyes morning, noon and night. I was losing everything. OMG, what did I do? I just left my solid job over over 20 years for this small business opportunity in my town. I left a high paying gig for one that didn’t promise me a penny. (another long story one day).

I have worked hard to not go into debt. However, right off the bat, my franchise expected me to pay for a new machine that was madatory. Boom, dang, guess that $10,000 visa card will have to used since I didn’t have a few thousand to pay that nice tab. A year later, boom,  I was required to buy a new register system they required with another few thousand $ price tag. Slowly that credit card was maxed out due to the little “emergency needs” that popped up. Just like in our normal life, Murphey was a calling and I never set up an emergency fund. There were no profits to pull a salary never mind pay for new equipment.

One of my large vendors allowed you to pay a week or two into the future. Slowly that also crept into having 2-3 weeks of debt.

emergency fundSo while I may have orginally purchased debt free, I really didn’t truly stay debt free. My debt monitor shows a debt of $153k. Hmm, lot of debt for a debt free company wouldn’t you say? My “true debt” is probably around $25k but I am including the remaining time on my lease. I owe them no matter what happens (open or close). So until that lease is paid off and I am no longer in business I will owe.

The lesson I’m trying to share is, if you are going to be debt free (which I highly recommend) please, please make sure you have an emergency fund. Things will break, you will be required to buy stuff, crap happens. Just like in real life, our business is the same. So be prepared!

T

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Owning a Business vs Buying a Job

Owning a Business vs Buying a Job

(and a bad paying one at that)

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Dave Ramsey is always trying to help new business owners realize there is a differnce between owning a business and buying yourself a job. Unfortunately, I was a little too late for this nugget of wisdom. I bought a 5 year “job” that paid nothing and cost me everything.

Maybe it sounds melodramtic but I don’t mean it too. It is just the truth. My truth. My ultimate stupid tax was buying my business.

Being the optimist that I am, I try and step back and focus on the true lessons the past few years have given me vs feeling the empty pit in my stomach. LOL.

I’m sure I’ll talk about this decision in several posts. I really need to help others realize how dangerous it is to “buy a job” vs owning your business. Working hard to build something that can become very successful is awesome. I plan on doing that with my new business. My new direction. The place I’m using all the knowledge I gained from the previous 5 years.

I have worked pretty much every day the past 5 years and took zero income. Yes you read that right. I lived off the money I worked 25 years to build. Now it is all gone. Lets do the math, it took me 5 years to lose what 25 years took to build. Hmm, that is some bad retirement plan.  LOL. Not to mention the no days off part again. I laugh now, but if I think too hard I could cry.

Just chalk it up to another life lesson. One I plan to help others with and one I plan to rebuild stronger, faster and even larger.

The journey of getting out of debt is only partly the financial side of it, the other side of the coin is to take moments to reflect what got you there and how to change your mindset to form new habits and grow stronger. Not to mention to help others.

More on this part of my journey as we move on. For now, just know that if you are planning on buying a small business, slow down turbo and make sure you think this through. I’ll keep sharing my thoughts and what I learned…

More to come…

T