Having debt in business is a horrible idea. From practical experience I can tell you that it’s far better to start small and build slowly then to acquire debt and build too fast.

You’re asking for trouble the moment you borrow another person’s money to try and run your business. Any risks you take are enlarged. Subconsciously you don’t feel risk, since it’s not your money. When you have to make a decision using your own money then it’s on, you’ve got skin in the game.

At one point I was involved in a project where we took on a loan to get started. We wanted to get into a new industry and believed that it was easy money, which of course should have been warning number one. We thought we’d pay back the loan within a month or two. Half way into the project we ran into some unexpected challenges. Unfortunately this forced us to stop the project entirely. Since we had borrowed the money we had to pay it back out of our own pockets, which ended up taking nearly two years. We took on a loan and believed we’d immediately return the money.

Dave Ramsey has helped to completely change my mindset on debt. If I borrow money I’m a slave to the person loaning the money. Plain and simple. It’s not that having debt is a sin, but do I enjoy being a slave?

Had we been forced to use our own money we would have either started smaller, or decided to not do the project at all. When we used borrowed money to accomplish something it only magnified our risk. When you use your own money to start something you’re far more careful about how it’s used.