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INTRO How do people not end up in debt for life while starting a business?

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BringTheFood

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Feb 18, 2021
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I got a question for some people especially those who have had businesses fail and then continue to try again. A lot of businesses especially those with physical brick and mortar locations seem to require a LOT of money to start, money that most people dont have on hand and require getting loans. When that business fails which happens often especially to first timers, how are you not stuck paying off those huge debts the rest of your life and how do you even afford to be able to try again.
It always seemed to me like once youve failed once and are now stuck having to pay back all loans you took out for an extremely long time, youd never be able to afford to try to start another one. It feels like the thought of being in the hole for the rest of your life if it fails is a huge reason why many people dont attempt starting a business to begin with.

Im not too knowledgble about how all that works, so maybe theres some way of avoiding being personally in debt afterwards that im not aware of. Can someone shine some light on that?
 

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MJ DeMarco

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A lot of businesses require a LOT of money to start

LOL.

Unless you're starting a restaurant or some other industrial type of product, this is simply not true.

Most business can be start < $5000, many, < $1000.

And since you started off your question with a FALSE premise, therefore, I will not bother answering further. I'm gathering you're pretty convinced of your underlying premise.
 

BringTheFood

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Feb 18, 2021
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LOL.

Unless you're starting a restaurant or some other industrial type of product, this is simply not true.

Most business can be start < $5000, many, < $1000.

And since you started off your question with a FALSE premise, therefore, I will not bother answering further. I'm gathering you're pretty convinced of your underlying premise.
To be fair, I actually had the type of businesses that have brick and mortar locations such as restaurants and the like in mind when asking the question. So if possible and you can entertain an answer, I would greatly appreciate it.
 

MJ DeMarco

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To be fair, I actually had the type of businesses that have brick and mortar locations such as restaurants and the like in mind when asking the question. So if possible and you can entertain an answer, I would greatly appreciate it.

I don't recommend businesses that require a heavy capitalization -- they have high risk, high debt, low margin, and limited to no scale.

So to answer your question, a newbie entrepreneur who wants to start a restaurant is probably a bad idea as you have mentioned, there is too much potential to have a failure wreck your life for years.

This forum is not about starting restaurants or other capital intensive ventures. IMO, restaurants are terrible businesses (And CV-19 pretty much sealed that notion) unless you have a larger global vision with franchising and chains.
 

ZCP

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you learn and do again. or you quit and remain defeated.

since you have never done it, how do you know that it plays out the way you have it playing?
what if there is another way?
what if you are wrong?

have you actually priced starting the business you want to start?
have you checked to see if you could partner / acquire a business that already has what you need?

step 1: get out of your own way
step 2: pick a way and go fail miserably
step 3: pivot and build anew
 

thechosen1

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1. Utility > everything else
2. Making money =/= spending money

Apply the minimal effective dose.

Know yourself - don't pretend you're at level 5 if you're at level 1. You need to start at level 1 and go to level 2, etc. What I mean is, don't hire a hot young secretary when you're barely making enough money to pay your own bills, for example.
 

socaldude

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I would focus more on the actual product or service. It’s the actual enhanced efficiency and utility and increased productivity that creates shareholder wealth. So in essence the mind is a more important input/output mechanism to creating wealth. Not going into debt.

You are not doing a whole lot of “value creation” so to speak with debt because there is not a whole lot of “mis-allocation” of resources. Anybody can just borrow money.

I would focus more on the core principles of innovation and technology. Then once that’s a proven concept, then you can raise money from investors or from lenders.
 

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