Should I Go Into Debt When I Launch My Business?

Q: All my life, I’ve heard people say, “You have to spend money to make money.”  But I’ve also learned that going into debt is not a good idea when you’re launching a new business. How do I reconcile these two philosophies?

Alex C.

A: Alex, right now, that decision is probably being made for you because interest rates are so high. You’d be pretty foolish to go into heavy credit card or loan debt when the average credit card interest rate is now hovering around 25-30%, and that’s assuming you have good credit. If you’re trying to launch a start-up business or work on your side hustle, you need to figure out how to maximize your key revenue source(s) and budget based on this instead of racking up expenses on a credit card or taking out a high-interest loan. Spending recklessly and it will come, does not work, especially in today’s economic environment.  I’ve seen too many start-ups get investment or seed money and spend it all before they were able to develop any revenue. Those same start-ups aren’t around today.