MCBRIDE FOR BUSINESS BLOG

McBride for Business Blog

Is Business Debt Bad?

September 15, 2017 // R. Shawn McBride // No Comments »

I recently listened to a radio call-in show, hosted by a famous national figure. On that show, somebody asked, “Is business debt bad?” And they were categorically told that “Yes, it was. All debt is bad.” Here I’m going to disagree. Generally, we think about debt as bad, and we think of savings as good. However, that’s a very simplistic view of the world and how things work. Often, debt is used for things that are not productive. If you’re using debt in your business to pay for highly intangible items of suspect value, then indeed debt may be bad. However, if you’re using debt for productive purposes, not to buy a new shiny car, not to showcase your business at a fancy dinner, and not to fly to extravagant meetings, but if you’re using debt to build a productive base of your business, I think this could be good debt.

All businesses require infrastructure and capital. You’re going to get there one way or another. Some people trade their time for this infrastructure or capital, in that we do a lot of things on your own when you first start your business. But there’s nothing wrong with involving others, and there’s nothing wrong with buying assets for your business. The key is you need to understand what you’re doing, and you need to do it in a controlled methodology. I think business debt is bad if you’re doing it in an uncontrolled way, if you don’t think about how it adds to the greater good, and if you don’t bring all the pieces together. But, if you’re bringing it all together, and you understand your plan, and you’re using the debt to advance where you’re going in a controlled way, then I think business debt can be positive. I would not hesitate in starting a business, using debt, if you understand the business and the risks, and are willing to make the efforts to make it successful.

There is no one clear answer in most places in life, and there is no one clear answer on whether business debt is bad. I don’t think it’s safe to just make a categorical assumption that all debt is bad, there’s more to it.

What’s been your experience? Have you been looking at business debt? How can you maximize your income and minimize your risk? Join us in the comments below and let us know about your thoughts and experience.

 

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This posting is intended to be a tool to familiarize readers with some of the issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. Each case is unique.  Past results do not guarantee future outcomes. This article should not be treated as legal advice to any person or entity. Freeimages.com/photographer Melissa Ricquler.

 

About the Author

R. Shawn McBride is the Chief Innovation Officer at McBride For Business, LLC. His signature keynote, The 3 Laws of Empowerment, gives audiences an entertaining look at how they can prepare, plan and protect themselves. You can email R. Shawn McBride or (214) 418-0258.

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Posted In: Business, Growth



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