It’s no secret, starting up a new business is both risky and expensive. In fact, as the following article discusses nearly 60% of start-ups rely on credit cards for financing during their first year of business. But just because it’s common to do so doesn’t make it right. In fact, the article goes on to discuss that for every $1,000 increase in credit card debt, a firm’s chance of survival decreases by more than 2%.
So what is the entrepreneur to do? Rather than funding your business with personal credit cards, you should consider finding investors. As the article points out, this will put you in the best possible position to succeed. What I like most about this article is that it doesn’t completely discourage credit card use. As in most situations, using a credit card wisely may actually help you out with your business. You just have to be smart about how you use it. And if you were unfortunate enough to keep your new business afloat with credit card debt, you might want to speak with an attorney experienced in negotiating unsecured debts. It just may be that you won’t have to pay back the full balance due, especially if you can show a decent hardship associated with the accumulated debt.
Kevin Fallon McCarthy
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