So you want to start your own business. You came across this great opportunity. You have the resources to help you build it and the network to assist you and keep you motivated. You got it all set up. Looks like it's a win win. But one thing most start ups fail to take into account is pre-existing debt.
The number one reason why businesses fail is because they run out of capital. When it's a home bases business, that capital is being used to cover your every day expenses to live. Mortgage, utilities, food. Most will over capitalize because they put too much infrastructure into place ( to much overhead). When they don't make any sales, down the drain goes the money they would have used to pay for things like the mortgage, utilities, food, etc.This is now creating a debt. How do most people compensate? Cover the difference with a credit card. A recent study by Robert Scott of Monmouth University found that “every $1,000 increase in credit card debt increases the probability a firm will close by 2.2 percent.” It also explained that “reliance on this type of financing may lead many businesses into a long-term liquidity drain that affects their financial stability — and thus survival.”
Enacting a plan to reduce debt can save a business. Below is a short video for a debt elimination calculator.