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3 Ways to Start a Business Debt-Free

Stephanie Dinger,

September 28, 2018

Building Your Business


In my role as Business Banking Advocate at UBT, I listen to a lot of business pitches. I’ve met with some incredibly engaging, smart, and creative people with all kinds of ideas. About 90% of these conversations turn to business lending. As a business owner, being prepared for these conversations is crucial, so they don’t sound like this:

  • “I've been thinking about starting this business for years and I am finally ready to do it.”
  • “I am sick of my day job.”
  • “I just need a small loan of $500k to buy the best equipment, the best building, hire the best employees, pay myself, and start making lots of money.”
  • “Did I mention my credit is beat up and my personal savings is virtually non-existent?”

Business is risky, no matter how good your ideas may be. Nothing is guaranteed. Well, one thing is guaranteed — if you take out a loan to help you get started, the bank will want to be paid back. So if that isn't the best approach, what is? Save. Side-hustle. Scale.


If you are serious about starting your business you need to get serious about saving. A lot of entrepreneurs I work with are unable to take salaries in the first year of their business. This is normal. Entrepreneurs that can personally cover all their own startup costs have a much better chance of success.

Not good at saving? Here are a few tips. First, review your income and expenses. Put your transactions into categories and understand where your money is going. You have two options: make more or spend less. To cut spending I highly advocate for the "envelope system." This is probably the same system your Depression-era grandma used. Whenever you are paid, pull out the cash that you have budgeted to spend and get envelopes for each bucket of spending (groceries, fun money/eating out, gas, etc.). There is something about watching cold hard cash disappear that really makes you think, "Is this worth it?"


You do not need to start with a huge building, great equipment and employees. Sure, this isn't true in every case but let's say you want to own your own bakery. Start baking cakes for friends and family. Set up your website, your social media, and start learning how to market yourself. There are a lot of pieces of your business that need to be established so why wait until the time is "perfect.” As part of your side-hustle focus on removing risk from your idea. Talk to potential customers. If you can, start doing work for them. Figure out your profit margins, how big your market is, research your competitors, and begin preparing your business plan.


If you start a side-hustle the goal is to reach a point when you are ready to grow. Look at the numbers — how many customers do you need to break even and start paying yourself? Is that number realistic? The scale at which you do this is very important. I would recommend:

  • Slowly scaling your business.
  • Consider renting space before buying.
  • Is there used equipment available at a good price until you can afford to purchase new?
  • Wait to hire employees instead of diving in head-first with a "build it and they will come" mentality.

Scaling slowly not only helps you avoid outside funding but it allows you to learn as you grow. Most of the entrepreneurs I work with are not formally trained in business; rather, they are starting a business because they are amazing bakers, expert mechanics, or good (insert your skill here). There is a reason individuals pay to get an education in business — there is so much to learn!

Borrowing to start a business sometimes does make sense, however, it is a lot less risky if you save, side-hustle, and then scale. Not sure how to do this? Let’s talk and dive deeper into all three of these areas and help you move your business idea forward.

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This blog article is for informational purposes only, and is not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.