Five Ways for Entrepreneurs to Avoid Debt

Five Ways for Entrepreneurs to Avoid Debt

Manage costs and shop around for the best deals to avoid the debt trap.

Entrepreneurs do not have a guaranteed consistent salary, so managing money and particularly debt is key to survival and success. Every entrepreneur dreams of being the next Richard Branson, but research published in the Daily Telegraph states that more than 50% of businesses fail within the first five years. Key to nurturing your fledgling organisation through this critical time is managing debt. Here, we examine five ways of doing so.

Office equipment

We all want a sparkly, well-furnished office with the best technology, but that does not necessarily mean paying over the odds. In fact, you can be well kitted out at a bargain price by thinking outside the box. Choose from a vast array of used computers for sale at a fraction of the cost of buying new. Buying used IT does not mean compromising on technology or reliability, as by purchasing from a reputable source you still get machines with the latest software and a full warranty. Similarly, there are many shops specialising in the sale of used office furniture. Again, this does not mean ancient wooden desks that are falling apart - it really is possible to save thousands by buying “as new.”


Before you buy the furniture, you will of course need an office to equip. Lease prices vary according to location and facilities. A city-centre location in a prestigious new development sounds great, but think hard about what would be ideal, and what you really need. Will clients be visiting your office, and if so, how many and how often? How many staff will be employed, where do they live and how will they get in to work? The answers to these questions will help you decide how large an office is needed and how much space needs to be devoted to meeting facilities. There is an increasing choice of out-of-town office facilities in more rural settings, for example in redeveloped commercial units in villages. These are far cheaper than city-centre locations and often carry hidden benefits like free parking at the roadside. A village location can also lend a unique charm or quirkiness to your business, of which you can take full advantage in marketing campaigns.

In-house or outsource?

When deciding what to keep in-house and what to outsource, it is important to look at all business functions and, as ever, to be prepared to think outside the box. For example, a small manufacturing company might automatically think that it must manufacture everything from scratch as that is its raison d'être, while accounting and web design are automatically outsourced to third parties. This is sound thinking on the face of it, but check all the options. Employing your own bookkeeper or web designer, even on a part time basis, might be more cost effective. Similarly, some part of the manufacturing processes might be accomplished by outsourcing to an overseas supplier.

Hidden considerations

Monitor and rethink everything, even things that you might think are minor or one-off expenditures. Advertising costs can escalate as you think of “just one more” possible route. The mantra is to decide your budget, make your plan and stick to it. Membership of professional bodies is another area in which entrepreneurs can run away with themselves. Analyse the cost against the benefits and do not just join everything that is going.


The final elephant in the room is the subject of loans. A small business loan is not necessarily a bad thing, but consider whether you really need it. There are plenty of good deals to be found if you shop around and the Funding Circle give some specific guidance. One thing is certain, the less you borrow, the lower your repayments and the better the chance that your business will still be thriving after those critical five years.