Even though my music arranging business ended up as a second stream of income, I really did everything backwards.
This was the process I originally went through 5-6 years ago:
- Had a little bit of debt.
- Came up with a "great" business idea.
- Started my business and realized I didn't have enough money to get it up and running in a "big," professional manner.
- Refinanced our home to get more money out of our house. Went through $2,000-$3,000 rather quickly!
- Took out a $25,000 personal loan to "pay off" 2 small car loans, a couple of credit cards, and used remaining money (approx. $4,000-$5,000) to attempt to grow my business. My big concern at the time was figuring out a way to lower my payments down to a "manageable" amount and still get some money out to grow the business.
- After spending all of this money, the business was painfully slow in growing. Many months, I was funding business expenses through my regular income.
- After many stressful months of this plan not working, my wife and I sold our house, used our equity to pay off half of the debt, and then the next 18 months to pay off the remaining $12,000.
This would have been a Smarter Financial course of action:
- Had a little bit of debt.
- Came up with a "great" business idea.
- Started my business and realized I didn't have enough money to get it up and running in a "big," professional manner.
- Decided to grow the business more slowly. Educated myself on growing a business through books, mentors, etc.
- Went out and got a second job with a steady monthly part-time income.
- Paid off our current debts as quickly as possible.
- Once the debts were paid, we saved enough money to cash flow my business start-up in a smarter way. The business started to grow; attracted more clients; quit my initial part-time job.
- We didn't have to sell our house! We still have equity in a home!
Even though hindsight is 20/20 and I wish I had done things the smarter way, I have no regrets in how things turned out. I feel like I learned a lot over the past 3-5 years. I learned my lesson the hard way, and I'll never do "stupid" again when it comes to home purchases, debt, and starting a business.
Larry
No comments:
Post a Comment