Do you have a great new business idea and thinking about taking a loan to start a business? If yes, then you might want to read this first.
Many people dream of being the commander of their ship that will define their legacy. It’s quite common to fall on a bank loan to launch a business and fulfill that dream. The plan is usually to pay it back when the business launches off the ground and becomes successful. However, that plan for success may end in failure, right?
Generally, everyone thinks of success when they start a business but not many think about failure. What would happen if that business fails?
That loan might force you to go back to the grind of 9-5 so you can repay it. The very grind you tried to quit in the first place. It may so happen that by the time you have some money, you give up on your business plan altogether.
What’s worse, that loan might even put you in poverty. Most of the loan money would have already been invested in the business. You may not be able to pay it back if you can’t get a job soon enough.
Now, we are not saying that you will fail if you decide on taking a loan to start a business. We want to question that common belief. Do you need a loan or a debt this early in your business life? We strongly believe that you don’t need to take a loan to start a business.
Dan has started multiple businesses over the last 20 years. He has seen multiple successes and failures. Based on that experience he has developed a belief that has proven to work well for all his mentees.
Why Do You Want to Start a Business?
Every other day, Dan meets people who think they have the next big idea. They are looking for advice on how to get funding for their business. Most people wonder whether they should be taking a loan to start a business.
We believe that we are all living in the most interesting time in human history. It is a highly prosperous time to be alive. Isn’t it? There is a lot of money to be made.
With the internet, anyone has the power to start a business and reach an audience across the globe. And with social media, we get to know about a new millionaire every now and then. Right?
But, these times are marked with a lot of uncertainty along the way, too. As we mentioned earlier, not many people think or plan for failure. Social media isn’t rife with talks about the people who failed.
Not many people talk about hopeful business owners who lost all their money due to a crash in the economy. Entrepreneurs whose businesses went bankrupt aren’t talked about either.
Fundera conducted a study on small businesses’ failure rates. They found that:
- 20% fail in their first year
- 30% fail in their second year
- 50% fail after five years
- 70% fail in their tenth year of business
There are several reasons why these businesses fail. The most common ones are:
- A Lack of demand
- Poor management
- Cash flow issues
So, before you think of taking a loan to start a business, you should ask yourself a fundamental question. What’s the reason behind your decision to start a business? Is it because you want to quit being trapped in your 9-5?
If yes, then starting a business may not be the solution for you. It could lead to several serious problems in the future.
Business is Not For Everyone
On the surface, having your own business or being an entrepreneur seems glamorous and prestigious. The possibility of getting into the history books as someone who changed the game is worth chasing. Isn’t it?
At the very least, you work for yourself and don’t have to slave for someone else. You determine the work hours for yourself and your team. There is the lure of reaping most of the financial benefits, too. The alluring lifestyle of independence filled with fast cars, mansions, fancy yachts, and so on. Right?
Why isn’t everyone able to achieve these substantial rewards, then? Well, there is always the fact that not everyone has the passion and the drive that you have. But is having a drive enough to start and sustain a business? Not really.
Most people are driven because they just want independence and want to be their own boss. Sometimes, it is just an aspirational feeling that inspires people to take the leap. Some people think it will make them stand out in their circle as a visionary.
The initial fire can be so strong that most people convince themselves to take risks they aren’t ready to take. Taking a loan to start a business is one of them. But, the fire can run out very soon.
The business owner may have felt ready to start a business but didn’t know how to sustain it. That’s the primary and fundamental reason you find most businesses failing in the first few years. Lack of foundational skills such as market understanding and financial mismanagement play a huge role in business failure.
Many small businesses are doomed from day one, not from competition or the economy, but from the ignorance of their owners. Their destiny is already decided because they have no idea how a business should be operated. – William Manchee
You see, entrepreneurship is not for everyone. Most people start a business with passion and the rewards in mind, ignoring the responsibilities and behind-the-scenes work involved.
The Reality of Owning a Business
When you start your entrepreneurial journey, there are a lot of factors that create incredible pressure. You need to be extremely resilient to face the daily challenges, and be able to absorb huge financial losses. You have to be prepared to handle the mental pain that comes along with it, too.
It could take you several years to achieve the rewards you hope for. As we mentioned earlier, people start a business because they want freedom, free time and more money. The reality is that in order to get those rewards, you will have to give up all that, first. Possibly after many years of struggle, you may see those potential benefits of being a business owner.
At the start, you will have to struggle to make ends meet. You may run out of finances to run your household because every cent goes into business. If you think that taking a loan to start a business will help you, you might want to think again.
Furthermore, you will not have free time because there will always be something that needs to be done. On top of it, you will not have freedom because you will have many responsibilities.
If you’re going to run a small business, you need to know what everyone is doing, be the first one in and the last one out, and work weekends. – Glen Mazzara
We are not saying you can’t start a business and succeed. Nor are we saying that you shouldn’t start a business. We are saying you shouldn’t start it because of the wrong reasons and without the skills required to succeed. You should definitely not be taking a loan to start a business under the illusion of a fancy lifestyle.
If you don’t have enough money to fund your idea, you may not be ready to start a business, yet. We suggest you equip yourself with the right skills first, to reduce the financial burden from your shoulders.
Did Dan Think About Taking a Loan To Start A Business?
Dan never borrowed any money to start a business. He started with no money in order to generate income and revenue in his businesses.The best person to fund your business is you. Click To Tweet
People need to be able to generate revenue before they think of taking a loan to start a business. If you can’t generate revenue, in most cases, it means that you shouldn’t start a business, yet.
There are several skills required to succeed as an entrepreneur. Leadership, task management, communication within your team, and networking to name a few. Moreover, if you don’t have the ability to sell or close to get customers, taking a loan will not help.
Yes, a lot of these skills can be honed with experience but you need to have a foundation. Furthermore, you should first focus on generating a steady income to fund your business. Essentially, learn how to generate revenue by bringing value to the marketplace in exchange for money. This way you could fund your business in a very secure way.
You could always keep your day job and build up your savings. Once you have enough savings you could start your business on the side. If it works out, then you can quit your job and live your dream.
But, today the job economy is extremely unstable. We are being hit with recessions every now and then. On top of that, most jobs are being automated. You may have noticed job cuts have increased around you. Imagine taking a loan to start a business on the side and then being laid off. That will be a nightmare. Wouldn’t it?
So, what can you do? Well, a more reliable and secure way to fund your business is by developing the right set of skills. We advocate taking calculated risks to reduce the chances of failure.
Between calculated risk and reckless decision-making lies the dividing line between profit and loss. – Charles Duhigg
High-Income Skills: Skills That Pay The Bills
Dan defines high-income skills that can make you at least $10k a month. These are the skills that take care of your expenses so you don’t have to worry about paying the bills. You take the very basic financial headache of running your household, out of the equation.
Furthermore, with high-income skills, you don’t need to be taking a loan to start a business. A high-income skill can help you earn the money you need to fund your business. The best part is that these skills are only dependent on you and your ability to produce results. You bring results to the marketplace and get paid for them.
The high-income skills that Dan teaches his mentees across the globe are inherently beneficial for businesses, too. They build a strong foundation for success in business. These powerful skills will help you start any business in any field. They enable you to expand into any market and in any country.
That’s when you will have unshakeable financial confidence. At that stage, you will not be thinking about taking a loan to start a business. When you are financially confident you only rely on your own skills. No matter what happens to your business, you will be able to bounce back. In essence, you will always be confident about being financially secure and stable.
Here’s a list of high-income skills that you should consider adding to your skillset. First, we suggest you take the high-income skill quiz to find out which skill is tailor-made for your personality.
You see, using many of these skills, Dan cracked the code on building his personal wealth. These skills have enabled him to start several multimillion-dollar businesses. This philosophy of stacking skills and building towards generational wealth is the foundation of Dan’s concept of The Wealth Triangle.
Unlock A Lifetime Of Financial Confidence
Simply put, the Wealth Triangle is a step-by-step guide to creating wealth, keeping wealth and multiplying it. It is defined in 3 stages:
- The Power Stage – Once you have mastered a high-income skill, you attain a certain power. You become the most powerful version of yourself. Basically, you have the power to do what you want and can live how you want to live. In other words, you have full control of your income.
- The Profit Stage – Then you reach a stage where you can predictably and steadily increase your income. If you feel like it, you could start a scalable business that is suited to your skillset. What is a scalable business? A scalable business is a business that does not require much investment to grow. You will never have to think about taking a loan to start a business.
- The Possibility Stage – This is the absolute elite level. This is the last stage. The stage where you multiply your net-worth and your significance. This is where you learn to make high-return and low-risk investments and create true wealth.
These stages aren’t based on conjecture or hearsay. They are based on Dan’s own experience and journey to success. If you follow this blueprint, you will have the skills required to succeed in business. What’s more, you will realize if you even want to start a business or not.
Most people start a business because they want independence. Right? Well, you would have plenty of independence if you master a high-income skill.
That’s why the second stage (The Profit Stage) of starting a scalable business is optional. It’s up to you at that stage to decide if you even need to start a business. At the very least, you won’t need to be taking a loan to start a business.
The Master Key to Success in Business
The bottom line is if you go into business without proper planning, you could lose all your money. Just like that. But, it’s not all bad news. In the world we live in today, the opposite is also true. You also have the ability to make a large sum of money.
Ten years ago, Dan wrote a book called FU Money. This book has sold hundreds of thousands of copies and has helped a lot of people. However, since that book, Dan has built several more multi-million-dollar businesses.
It’s been an incredible decade for Dan. This decade has taught him that it’s his legacy to unlock the financial potential for others. That is the reason he wrote a new book called Unlock It.
This book is the master key that will help you develop unshakeable confidence and change your life. In this book, Dan will take you step-by-step through all the stages of building wealth. You will learn actionable strategies that you can start implementing right now and achieve success in the long-run.
You will never have to worry about taking a loan to start a business. Instead, you will learn to unlock long-lasting wealth. This book will also teach you to:
- Start or scale a side income so you can set your own hours. You could make as much money as you want, and work from anywhere you want to.
- Leverage your natural strengths to reach higher levels of success.
- Achieve wealth, success and significance for the rest of your life.
For most people, wealth is tightly locked behind a door. In this book, Dan will give you the right key that can help you open the door. All you need to do is grab the master key and unlock the door to your success.