Leverage can be intoxicating
I’ve never been a big fan of real estate, though I have written about the topic recently. Over the past few weeks I’ve considered the power of leverage in other areas besides real estate- such as my business. For the past 2 1/2 years I have been running a small business in my spare time. While it has been fairly successful, it is certainly not profitable enough to quit my day job.
Enter leverage
My business has the potential to be very scalable. All I have been lacking is the time and the capital. What if I take out the small business loan to provide myself with the needed capital? With this capital I will be able to scale my business to create a full time income. This would, of course, eliminate the need for me to have a day job. One of my long-term goals is indeed to stop working for “the man.” Besides being a hassle, there is limited upward potential when you work for a company.
The risk is enormous
What would I risk by taking out a huge loan? Oh, nothing much. Just a great fulltime job, my family’s well-being, my retirement savings, and my perfect credit history. In other words, just about everything. The risks are huge, but the potential rewards are even bigger. I just need to remind myself not to get carried away. If I go forward with this, I need to make sure that my risk is minimized, and I do everything possible to be successful. The next few weeks will be full of deep thought.
April 28th, 2008 at 9:45 pm
Good luck Llama, it’s certainly a decision not easily made. I also plan on working for myself after I pay off my debts. My plan is to build up a substantial emergency fund (at least 18 months worth of expenses). That way I’ll have a full year to go at it on my own and if it doesn’t work out I’ll still have 6 months to look for work.
I hope it all works out for the best, whatever you decide.
April 29th, 2008 at 2:24 pm
I’ve by no means made a decision yet. Family always has come come first – it’s not as easy as when someone is single. If I fail and have to eat ramen noodles and live in a box by myself, no biggie. But I couldn’t put my family through that.
That being said, it gets tiring working for someone and butting up against the ceiling of potential. Working for myself… there is no ceiling. There’s a lot to be said for that. Smart move on building that savings though – that will be a huge safety net for you.