Staying Debt-Free In Your Business

Apr 1, 2013, Written by Sue Miley

When I started my business I just started.  My investment was in my education.  Being a counselor requires a Masters degree.  We had the money for this so I didn’t have to go into debt.

I didn’t make a ton of money the first couple of years.  Actually, less than I think I made in my mid-20’s.  But I felt this path was my calling so we managed.

I just signed the check to renew my license for the 3rd time.  That means I have been practicing for eight years, and fully licensed for six.

Growth Is Still Possible Without Debt

My business has changed a lot over the past eight years.  The one thing that hasn’t changed though is that my business has never had and still has no debt.

What does having no debt mean?

  • I don’t have a business credit card, just a debit card.
  • I own the small 1200 sq. foot office space we are in.
  • I don’t have any business lines of credit or equipment loans.

We have grown over the past few years without debt.

Last year I wanted to move into a bigger office that had conference space, more offices for our team,  and was immensely more beautiful than my current space.  I think God said “no” because it fell through due to zoning issues.

And my stress stayed at a minimum.

No Debt Provides A Certain Freedom

Having no debt offers much freedom.

You can say no to work that doesn’t fit your vision.

You can add on work that is less profitable but has meaning.

If hard times come, or problems arise, paying the bills is still possible.

In Dave Ramsey’s book Entreleadership he recommends growing your business without debt.  He even prefers renting over long-term debt.  He has been able to still grow a huge business.

I don’t have a moral or religious issue with debt.  It is legal.  I have a mortgage on my home.

I have had balances on a credit card many times in the past.

No Debt Reduces Worry

I can say though that not having debt in your business keeps your business growing in a healthy manner.  It is one thing in the stressful demands of entrepreneurship that you don’t have to worry about.

Most businesses don’t make it past one year.  Many close within the first 5 years.

Reduce The Need For Debt

Here are a few ways to keep from joining the ranks of indebted:

  1. Always try to keep some of the profits in your business.  Many small business owners are living off of the profits and they take 100% out of the business.  Save some to capitalize your business without debt.
  2. Minimize your fixed expenses.  Utilize contract labor or outsourced vendors when possible to avoid fixed payroll expenses.  Pay cash for equipment to eliminate ongoing notes.
  3. Invest your savings in income generating assets or expenses.  Spend your money on resources that can help bring in revenue.
  4. Plan for the expenditures that you will need in your business to continue growing, and save for those, or shop for the best prices.
  5. Review your expenses regularly.  These days we spend money for apps and online resources and subscriptions.  Sometimes we quit using them but we don’t turn off the expense.  Other expenses we just don’t need. Prune regularly!

I was reading the blog The Minimalists.  They had a one line post:

The quickest way to give yourself a pay raise is to spend less money.

I like this!  How often do we do it!

Staying debt free in your business may slow down growth, and some people may need partners to start a business, but I would rather pick my partner than have the bank one day decide they are my partner……and they have a controlling interest!

What about you?  How have you financed your growth?


Reader Interactions


  1. Tracy Mason says

    I just LOVE your website!! So glad I found it! What a great article! I believe businesses should also try to be debt free…alot less stress! I think businesses should have a savings account too! Thanks Sue for all the wonderful information on here! Keep it coming!! Be BLESSED!!

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Sue Miley

Sue Miley MBA, MA, LPC helps small business owners build successful businesses on a foundation of Christian values. After 20 years in business, and 10 years as a Christian counselor, Sue uses a combination of faith, business and psychology to help clients in business and in life.

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