Borrowed Money

When people think about starting a business, many often ask, "How can I get a loan?" as if "How can I get a loan." were part of the sentence. It actually isn't, necessarily.

Tim's law is: DO NOT BORROW ANY MONEY.

Shakespeare said, "Neither a borrower nor a lender be," which I agree with. Work out of your basement or your garage, or a small room in your home, or a corner of your living room. U-Tube was started in a garage. Buddy Holly used to record demos in his bedroom. Borrow somebody's old car. Convert into cash some asset that isn't doing you any good. Maybe a relative has a vacant house or part of a warehouse that he'll let you use or rent to you at very low rates.

But if need money, borrow as little as possible, and preferably from family or friends who may give you money and charge you no interest. Make sure that, minus some disaster like a sudden health episode or financial disaster, you'll be able to pay it back. You don't want to mess up your personal relationships. And if a catastrophe does strike, your family and friends will understand why it's taking you longer to pay them back than you thought.

But start a relationship with a bank. Open a savings account or a checking account or buy a CD. if you have to go to a bank, get the best terms possible. And make sure your credit score is as high as possible. Use other people's money if you can, you supply the "sweat equity." Instead of asking, "How can I get a loan?" you should ask, "How can I start my own business such that I borrow as little as possible?"

What do you think about this? If you have something substantive to add, post a comment.

This is some of the stuff that will go into my entrepreneurship course. The ideas in it supply the life's blood of my professional activities: teaching, writing, and real estate. For entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for entrepreneurial writing to www.kearneymusicschoolmurders.blogspot/com.