A lot of small businesses rely on borrowed money to fund their growth. And if you are looking to expand your business but don’t have the means to invest, you’ve got a lot of options– business loans, venture capital, lines of credit, and more!

However, running a business in debt has many repercussions, especially if your company doesn’t do well in the months or years to come. So what do you do- give up on your dreams? Certainly not! You have the option of running a debt-free business and while this sounds difficult, it really isn’t.

Read on for six great tips!

Commit Yourself to Living Debt-Free

If you want to run a debt-free business, you first need to believe that it is possible. You also need to commit yourself to living without debt.

Note that living debt-free will require you to be patient and do things unconventionally. Committing to a debt-free life also means that success and growth will come about slowly. But the pros certainly outweigh the cons, so make that commitment right away!

Kill Debt

If you are living in debt, pay off whatever debts you can. Don’t take on all of them together; do it gradually.

Make a list of all your debts including credit card debts, car loan, student loans, medical bills, and mortgage. Next, figure out where you owe the least money and work towards paying it off. Pay your minimum monthly payments on all debts each month and allocate additional funds to the debt you’re trying to pay off.

Bit by bit, you’re sure to get rid of all your debts. Do rejoice when you clear off a debt- even if you have ten more to clear!

Build Cash Reserves

Building and maintaining cash reserves is important if you want to continue living debt-free. Up to now, you’ve perhaps relied on credit to meet your business’s financial obligations. Building cash reserves will mean having ample amount of cash as backup that you can use when needed. After all, you certainly don’t want to go back into debt or delay payroll should anything go wrong!

Ideally, you should have a minimum of about 3-4 months’ operating expenses stowed away for emergencies.

Stop the Debt Cycle

Close the line of credit and do away with all your credit cards. Don’t let undue fears stop you from eliminating all debt options available to you. You’re bound to feel anxious doing this, but it’s the best you can do to stop being in debt.

Watch Your Expenses

Whether you’re running a home or a business, you need to watch your expenses so that you don’t end up in debt by spending more than what you earn.

Here are some tips you could use to curb expenses.

  • Wait to Purchase
    You might have a long list of items you want to buy, and it can be very easy to swipe your credit card and get them. If you don’t intend to destroy your credit cards as yet, refrain from using them to purchase things. Wait until you have saved enough money to buy the things you need and then pay in cash or with your debit card to purchase them.
  • Rent Instead of Buy
    While buying your own office or machinery may seem to be profitable in the long run, it may not be the right thing for you at present. Instead of running into debt and buying your own space or things, rent whatever you can.Renting office space and equipment also makes you less liable for repairs and servicing. What’s more, you can always discontinue renting when you feel you’ve saved enough to buy!
  • Purchase Used
    If you must purchase equipment, consider buying used. You don’t always need to buy new stuff for your business and if you’re trying to live debt-free, the lesser you spend the better.Second hand vehicles, computers, printers, etc. may not be pretty to look at, but they’ll help you get the job done efficiently if you purchase right.
  • Look for Bargains
    If you must buy new furniture or equipment, don’t worry yourself sick over the expenses. There are lots of places where you can buy new stuff at reduced rates. Take a look at company websites or retail websites where you can get good deals.Don’t forget to check out store sales; subscribe to store mailing lists and newsletters to get notifications on discounts and special deals. Also, buying in bulk can help you save oodles of money; just be sure you don’t purchase in excess.
  • Outsource
    Consider what your core services and do your best to excel in that field. Outsource the rest of the work- not only will it save you from spending on infrastructure, it will also save from costs related to infrastructure and training employees.Moreover, you only outsource work that you need to get done, so it saves you from the hassles and expenses of recruiting employees, processing payroll, and more.

Focus on Sales

At times, small business owners can be so consumed by thoughts of business growth and expansion that they may forget all about focusing on sales.

If you spend substantial capital on purchasing new equipment or hire more workers only to realize that you’re not going to need any of them because you’re not making enough sales, you are sure to land in trouble. So research the market well before you make significant investments and focus on increasing sales!


If you are in debt, it may seem impossible to come out of it. Just slow down and consider your options- either you live a stressful life while being in debt or repay your loans as soon as you can and live stress-free!

You can’t guarantee that by running a debt-free business, you’re sure to be successful. However, in these uncertain times, you will definitely sleep better knowing that your business is running free of debt! Also, with ample cash reserves to back you up, you won’t have to go around looking for investors whenever you see the right opportunity.

So use the tips given here and get started on running your business debt-free!

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