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I have heard that if you believe in yourself/your business enough, you should use a credit card to get it started. Is this good advice?

By: Tim Berry

 

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I have heard that if you believe in yourself/your business enough, you should use a credit card to get it started. Is this good advice?

 
Answer: My answer to this is a case of “do what I say, not what I did.” I did this myself but I wouldn’t advise it in print, because it seems irresponsible. I was cornered at one point with no way out but outlandish high-risk borrowing, multiple mortgages and $65K in credit card debt. I also had full support and understanding from my wife.

I do believe, really, that these situations are best answered not by talk of believing in yourself and your business, but rather by serious realistic business planning. That’s what saved me and my wife. We took seemingly crazy risks but we didn’t with eyes open, based on a business plan that broke our risk and uncertainties down into meaningful assumptions, lead indicators we could track, and exit points at various stages in case things didn’t go the way we hoped.

It’s also important to understand that not all cases are the same. Credit card debt isn’t all the same. Some people go deeper in debt than others, some have more resources than others as a safety net.

But what’s most important here is I say don’t ever make a bet you can’t afford to lose. A business isn’t worth screwing up the rest of your life, and credit card debt can get you into a lot of trouble. Go into these dangerous waters very carefully, with a serious business plan, and a lot of thinking to provide a foundation to your decision to take this kind of risk. Understand that bet really well.

Faith is great for real life, and I’m a believer in faith for deep questions and inner peace; but business requires more than just faith: reasonable assumptions and realistic projections.

Published: November 20, 2013
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Tim Berry

Tim Berry is co-founder of Have Presence, founder and Chairman of Palo Alto Software, founder of bplans.com, and a co-founder of Borland International. He is author of books and software including LivePlan and Business Plan Pro, The Plan-As-You-Go Business Plan, and Lean Business Planning, published by Motivational Press in 2015. He has a Stanford MBA degree and degrees with honors from the University of Oregon and the University of Notre Dame. He taught starting a business at the University of Oregon for 11 years.

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