bank rates credit cards insurance finance calculators

8 Easily Avoidable Causes of Business Debt

DEBTEntrepreneurs are the brave souls who make our economy go, or at least they were when our economy was actually going anywhere. Especially in this currently questionable financial climate, starting your own business is undeniably a dicey proposition. Start-ups go out of business all the time, often before they even have a chance to even really star up at all. The main culprit in the savage slaughter of these young establishments is the same perpetrator behind the bulk of our fiscal difficulties: Debt.

As an emerging entrepreneur, it is very easy to quickly accumulate debts that are substantial enough to kill your burgeoning business before it even gets off the ground. But it does not have to be that way. Take the time to examine your business workflow and you will likely discover a number of extraneous costs that can be eliminated to improve the health of your bottom line.

Here are eight common practices that lead to common results; learn to avoid them and you will be uncommonly successful.

1. Not sticking to the necessities.

As good a place to start as any, this is an all-encompassing, catch-all principle. Be a good bootstrapper by spending money only on what is absolutely necessary to operate your business. Come up with less expensive alternatives for accomplishing your core objectives and only increase expenditures as your revenue allows you to do so. If you survive the all-important start-up period and find your bootstrapping techniques to be too restrictive to your growing business, then you are welcome to loosen the purse strings a bit and enjoy the freedom that comes with larger cash reserves.

2. Trying to do too much too soon.

If you jump the gun and attempt to launch too many projects at the same time, your limited capital will severely limit the time and budget that can be devoted to each distinct venture. New endeavors require individual attention and need to be slowly nurtured if you want them to be successful. If you try to commence too many undertakings simultaneously, all that you will end up with is a bunch of projects that are all failing to earn and are instead costing you money.

3. Not designing for scalability.

There is little worse than achieving initial success only to be undermined by your initial lack of vision and poor preparation. If your business design cannot be scaled up when you hit it big then you may be forced to absorb all sorts of unexpected expenses as you are attempting to redesign from scratch.

4. Failing to delegate.

Always remember, you’re the big idea man; don’t spend your time performing tasks that could be done just as well by a cheap hired hand. Though you might be tempted to micromanage and keep a close eye on every aspect of your enterprise, you will not only drive yourself crazy, but also drive your business into trouble.

5. Buying in bulk.

If you are starting a small business, don’t worry about having a year’s supply of copy paper on hand the first day that you hang up your shingle. You will have all sorts of expenses in the early stages of your start-up and you will need all of the ready cash you can keep your hands on. Clip coupons to buy only what you need and you’ll have a better chance of weathering the early storm of unanticipated costs.

6. Paying your bills late.

Whenever possible, meet your expenses with the cash that you have one hand. Rack up big bills on that shiny new business credit card and you could end up putting as much money towards accumulated interest and late fees as you are towards growing your business.

7. Throwing away your receipts.

It is difficult for many entrepreneurs to learn to separate their business expenses from their personal expenses, and this can end up costing a new business owner thousands of dollars in lost tax deductions. Be fastidious about saving your receipts and you will be in much better shape come tax time.

8. Failing to collect accounts receivable.

Sure you want to be the nice guy as you are starting your new business, but you need to make sure that you get paid as well. With the available tools for notifying clients of payments that are due, there is no excuse for not being on top of your accounts. A good place to start is Paypal invoicing, which is easy to use and easy on the budget. In addition, there are a number of other web-based invoicing applications that will send clients automatic balance reminders and even route payments directly into your bank account.

Comments (36)
1 Star2 Stars3 Stars4 Stars5 Stars (9 votes, average: 4.44 out of 5)
36 Existing Comments
  1. Carole said:
    on March 26th at 07:07 am

    With so many new businesses failing in the first year, this is excellent advice for those who intend to make it through!

  2. Lorraine Cohen said:
    on March 26th at 08:19 am

    These are great tips to follow at all phases of beginning, maintaining or growing your business!



  3. Helen said:
    on March 26th at 10:12 pm

    Thank you Carole and Lorraine. Thanks for visiting and posting your comments.

  4. Alexander said:
    on March 27th at 07:50 am


    This post is very much worthy. I appreciate the fact that I came across it. Thank you very much.

    God’s Blessings to you Helen.

  5. Investing & Passive Income said:
    on March 27th at 12:14 pm

    very nice site! good post too.

  6. Anthony Kuhn said:
    on March 27th at 02:51 pm

    This piece is spot on for avoiding the crippling debt that many startup companies take on due to lack of experience of knowledge. I linked to this article in my blog post today at the Innovators-Network so more business people can get the whole story from Thanks for you coverage, and I look forward to more great pieces.

  7. hyip said:
    on March 27th at 11:19 pm

    I agree all parts. Nice post.

  8. Michelle said:
    on March 28th at 08:11 am

    Thanks. Your advice in on target!

  9. Deborah Robinson said:
    on March 29th at 10:00 pm

    This article has been included in the latest edition of Mom’s Blogging Carnival

  10. Deborah Robinson said:
    on March 29th at 10:01 pm

    This is article has been included in the latest edition of Mom’s Blogging Carnival

  11. Helen said:
    on March 30th at 07:26 am


    Thanks for accepting our article.


  12. Leigh Ann said:
    on April 2nd at 04:30 pm

    Great info…..too bad I don’t have a business!!

  13. Donna Payne said:
    on April 7th at 06:37 pm

    Great advice… I’ll share this with my new website clients.

    Donna Payne

    Incredible FREE Gift! Time & Money Saving Techniques that everyone should know when working with a web designer or building a website yourself. Download your FREE “Quick-Start Web workbook” at

  14. Stephanie said:
    on April 7th at 10:51 pm

    It’s easy to get caught up in an idea that’s close to your heart. Step back and think about the business!

  15. small business coach said:
    on April 8th at 11:24 am

    Great article! One further question to ask is: Will this bring me more sales? Or do I need this to make a sale? Sometimes it’s easy to spend on things that seem like they will improve our business, but in reality we can wait a bit until our cash flow and sales are better.

    Darren Barr-Engstrom
    Small Business Coach

  16. Gary Jensen said:
    on April 9th at 09:57 pm

    I see #8 quite often with many smaller businesses, largely because the collection process can be very intimidating. This is especially true in tight knit communities where the business owner may see their delinquent customer at the grocery store, gas station, or even in church. It can make for a very uncomfortable and embarrassing situation depending on the circumstances, but you’re right, it shouldn’t be overlooked.

  17. Easton Ellsworth said:
    on April 10th at 10:30 pm

    On #7 – it helps to force yourself to put receipts in the exact same place, like a little clear plastic bin with a lid that seals on, every day. I tend to forget where I put things unless I make myself stick to that kind of ritual.

  18. RONPIERRE said:
    on April 11th at 08:47 pm


  19. matthew said:
    on October 17th at 09:35 pm

    This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone.

  20. hristopher.jessy said:
    on October 18th at 08:26 pm

    it is a wonderful opinion. The things mentioned are unanimous and
    needs to be appreciated by everyone.