Do you remember learning about the order of operations in math? Well if you don’t, the order of operations is just a set of rules that tells us what math to perform first when we come across a complex problem to help us arrive at the correct answer. Remember the mnemonic device PEMDAS for Please Excuse My Dear Aunt Sally. The order of operations is the reason that 2 + 3 × 4 is interpreted to have the value 2 + (3 × 4) = 14, not (2 + 3) × 4 = 20 (thanks Wikipedia for doing the math for me!)

Why am I bothering you with MATH?? 

Well, If you are trying to start a business when you are in debt, you have to come correct. You’ll do so by following an order of operations. Because just like in math, there is an order of operations in how to start a business when you are in debt. There are certain things that you should to do first to get the correct outcome so that you don’t end up in even MORE debt.

start a business when you are in debt

In addition to my day job, I currently run two small businesses, and have one business still in the works. These two businesses both have low over head costs, were inexpensive and simple to start up, and most importantly, bring in additional income to help us in our journey to pay off student loan debt. (If you are curious about what I do, I draft, review, and or negotiate contracts for one and my other business is this blog.)

I recently polled my Instagram to see what people thought about starting a business if they already had debt. I was surprised that the outcome was so close. I assumed more people would be against starting a business when in debt. So now I only have to convince half of you that if you want to start a business when you are in debt that it is actually OK using this framework. 🙂

start a business when you are in debt


In our order of operations, you should consider these four things first before you plow ahead with your business idea. First, you need a solid understanding of the debt you have. Then, you need to consider your personal and family’s needs. Next, you’ll take on the monumental task of determining the likelihood that your business will actually succeed. And finally, if needed, you’ll make sure you have good enough credit to proceed forward.



The starting point for determining how to start a business when you are in debt, is to assess your current debt situation. How much debt do you have? How many sources of debt do you have? For example, do you only have student loans? Do you have student loans and a ton of credit card debt and a mortgage and a car loan? Start by writing out all of your debts that you owe to every source. What are your interest rates like? What is the minimum you are required to pay each month? Can you afford to make all of those payments with a little left over to invest?



If you decide you can afford to at least make the minimum debt payments under your current debt load, then the next thing you should consider is what your family’s and personal needs are. For example, do you have 6 kids aka 6 mouths to feed at home? And no day job to support them while you are hustling on your business? Then starting a business when you are in debt might not be a good idea for you. On the other hand, if all of your own basic needs (and the needs of your family) can be maintained while taking on a business venture, perhaps you can and should proceed forward. If you are married or have a significant other, you will definitely need to be on the same page. Starting a business requires a lot of sacrifice on everyone’s part.



If you determine that you can manage your debt load and your family’s needs can be met, then the next step you will take to start a business when you are in debt is to determine the viability of your business idea. This will be the biggest and most important task you will undertake. It is going to take a bit of work. You will want to do the following things, very carefully:

  • Create a business plan. What is the name of your business? What is the mission of your business? How will you succeed? What marketing and advertising will you do? What service or goods will you offer? How much will you charge? How exactly will your business make money?
  • Understand start up costs. How much money are you going to need to get started?
  • Understand profit margins. How much money are you making?
  • Understand the ongoing costs of doing business. Think through every expense your business will have. Will you need to rent a building? Will there be construction/building improvement costs? If you have inventory, how much will it cost? Will you have any employees? How much will payroll cost?
  • Have an estimate of how long it will take you to be profitable.
  • Finally, think through what you stand to lose if your business fails and weigh it against what you have to win if your business succeeds.
  • Here is a good starting place for how to write a business plan.



If you aren’t sure what your credit score is and you are thinking about starting a business when you have debt, then you likely should check your credit score. This really only applies, however, if you intend to take out any kind of loan to start your business as you’ll need a good credit score to do so. In addition, your credit score can help you gauge whether you’re in a good enough place to start a business (though it’s not necessarily the perfect indicator. For example, when I paid off my student loans, my credit score actually went down a little as I no longer had that line of credit).


If you conclude that you can still manage your debt load, take care of your personal/family needs, and the viability of your business, then you can move on to considering the following factors to getting your business started. You don’t have to consider the following factors in any order, but according to our order of operations, you MUST consider the above four factors before you can start thinking about any of these.


This is not like Shark Tank where you are going to necessarily want to be “all in” and working on your business idea full time. Starting a business when you have already have debt is going to require you to be a little more careful. One important thing to starting a business when you have debt is to make sure that you have regular income coming into your household. This can be from your own day job or if you can afford to live off of one income, perhaps your spouse’s income.


Starting a business when you have debt means that you are going to be taking on EVEN MORE RISK. That means you need to generally minimize the risk in your life


When you start a business when you have debt, it is CRUCIAL to keep all of your costs (start up and on going costs) as low as possible. There are sundry ways you can do this:

  • CONSIDER CROWD FUNDING: A great way to keep costs down when you are starting a business in debt is to seek funding from crowd funding. You’ll need to weigh the pros and cons of doing so.
  • START AN ONLINE BUSINESS. One of the CHEAPEST ways you can start a business when you are in debt is by starting an online business. This can be a blog, website, or an e-commerce type of store. The sky is the limit. I personally chose blogging as one of my businesses because I was passionate about helping other people navigate life despite being deeply in debt, since I felt really lost coming out of law school and not knowing a single thing about money management. This was a topic I was already studying and researching in my personal life and so it seemed like a simple second step to simply share it publicly. In terms of operating costs, online businesses are about as cheap as it gets!
  • GRAB A PARTNER. Another great way to keep costs low when you are starting a business when you have debt is to share in the venture with a partner. Having a partner can be good even beyond start up costs. Sometimes its just nice to have another person to bounce ideas off of. But remember, you’ll later be sharing in profits and if sharing is not your thing, having a partner might not be the route you want to take.
  • KEEP OVERHEAD COSTS LOW. Do everything you can to keep your overhead costs low. For my contracts business, I currently operate by word of mouth only. That means that I don’t do ANY advertising. I don’t have a website. Just a business. I typically ask the people and businesses that I do contracts for to refer me to their friends and family. That means that my only costs are some use of my computer, electricity to work on said contracts, etc. My blog costs more but overhead is still quite low. I don’t have to pay for an office to rent out or pay for inventory to keep stocked. I do pay for web hosting and for a few other services, but my costs are well under what I earn– and that is the key.


If you’d rather not crowd fund and or share your business with others, consider taking out a business loan to get your business started. You’ll need to show that you have good credit and that you can afford the payments. If you are deeply in debt, you might not be able to qualify for a business loan without some kind of cosignor or guarantor. In my opinion, taking out another loan when you are already deeply in debt should be a last resort and only done if you are confident in the viability of your business and that you can still manage all of your other debt payments. Proceed with caution. A business loan might make sense just depending on the kind of business you are planning to operate. The important part is that you think it through and crunch the numbers to determine whether it makes sense (cents) for you.


If you are uncomfortable taking on more debt/risk, you could just start saving up the money that you will need to invest in your business while you are paying off your debt. You still have the obvious risk of losing the money you put into your business, but that is much better than owing someone else the money that you lost. In addition to making debt payments each month, put a little aside each month towards your business idea. The most obvious draw back of this approach of course, is that it will mean that you won’t be able to get started right away.

The truth is, if you are deeply in debt, simply pinching pennies is probably not going to be enough to get you out of debt. You are most likely going to have to find ways to increase your income. Starting an inexpensive side business is a great way to do so. You don’t necessarily need to wait until you pay off debt to get started, but you should follow the order of operations so that you don’t wind up end in a bind, buried in EVEN MORE debt. Remember, a little careful planning goes a long way.

What do you think? Should you start a business when you are in debt? I’d love to hear from you! 

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should i start a business if i'm already in debt

should i start a business if i'm already in debt

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