11 Tips to Avoid Debt

“Asking for money can be a saving tool, but it can also lead to failure.”

This is a concept from Warren Buffet, none other than the renowned billionaire investor who has as one of his principles to learn to avoid debt.

And is that according to the expert, the main problem is that many entrepreneurs they get used to living in debt because they leave one loan to get into another, thus forming an addictive behavior to debt that in the long run becomes a vicious circle.

So, to keep your profitable business and in healthy growth, regardless of its size, it is convenient to follow certain rules and tips for healthy investing:

1. Start your business with a plan, budget, and sales projection so that you can clearly determine how much you can pay for a loan.
2. Avoid very long-term loans. If your business is well planned, you should be able to pay the initial capital in a term no longer than 12 or 24 months.
3. Prepare a monthly spending budget and stick to it with discipline to avoid cash leaks that later unbalance your credit payments and turn into arrears and interest with the consequent negative effect on your company.
4. Avoid using credit cards to finance your business expenses. These should be used only as means of payment.
5. If you do not have enough financial knowledge, consult an accountant or an expert on the subject who can guide you efficiently.
6. Avoid at all costs going into debt to pay other debts.
7. Define clear policies in your business to buy and sell, thus avoiding the discretion that affects over-indebtedness.
8. Do not abuse the credit of your suppliers, on the contrary, pay them in time, thus forming a healthy culture that benefits you in the long term.
9. Don’t focus on lending money, focus on increasing your sales.
10. Do not apply for a loan unless you really need it and evaluate the conditions carefully.
11. Be a conservative investor. Invest only when you are 100% sure that you will win in the process. Robert Kiyosaki defines this as good debt.

Finally, you must always be alert and be able to detect when something is not going well, before it becomes a risk situation for your business. You will know that you are in debt if the financial structure of your company it is excessively supported by money from third parties, be it suppliers, credit cards or financial institutions. What other tips would you give that you have practiced in your company and that you can share?

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