America's foremost personal finance guru weighs in on small-business budgeting.
JULY 31, 2017
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You may have heard of Dave Ramsey before—perhaps from one of the 500+ radio stations his program The Dave Ramsey Show is syndicated on, or one of his five New York Times bestselling books. Or maybe from his appearances on Oprah or 60 Minutes.
Regardless, Ramsey’s name is synonymous with personal finance. His show garners 12 million listens a week and millions more have seen him speak in person on the topic.
What he’s not as well known for is speaking directly to the needs of small-business owners and the growing freelance economy. However, his insights on financial success can be just as easily applied to the needs of business owners.
We were able to chat one-on-one with Ramsey to get his wisdom on how small-business owners can boost their profit and peace of mind with simple budgeting strategies.
Hurdlr: You hate debt. Is there any scenario in which you would say it's OK for an entrepreneur to take out a loan to start or expand their business? Or do you recommend always going 100 percent cash?
Ramsey: A lot of supposedly sophisticated and educated people spend an inordinate amount of energy trying to say that debt is good when used properly. Baloney! According to Census Bureau data, 60 percent of all small businesses opened in a given year need less than $5,000 to start. Don’t begin your dream saddled with huge debt.
As for expansion, remember to be the tortoise, not the hare. Slow and steady wins the race. We have expanded our business several times, and each time we systematically save toward a purchase goal and put that very specific amount as a line item in our monthly accounting—almost as if it were an expense.
Note: If you can’t save the money you won’t be able to make the payments anyway. I agree with former A.G. Edwards analyst, Peter Andrew who said, “What kills companies is debt; without debt, companies have the wherewithal to survive.” Debt is a destabilizing force that exponentially increases risk and the probability of fatal failure.