I’ve been preaching the need for entrepreneurs to practice fiscal
prudence during these uncertain economic times. Keeping debt load to a
minimum is one of the more important steps a business can take, due to
the inevitability of rising interest rates if inflation continues to
heat up. Also, banks will be coming under more pressure to clean up
their loan portfolios — this means that even if you have made all of
your payments on time the bank may call your loan simply because your
credit risk is too high to fit with tighter regulatory standards.
Helen Anderson at her blog called Bankaholic also worries about entrepreneurs who take on too much 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.
You can read her eight avoidable causes of unnecessary business debt here.