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Managing Debt: The Holistic Approach Vol. 1

By Chris Black

Debt. Just the word printed on the page inspires more shivers and cringes than a Trump tweet read aloud at a White House morning staff meeting. It’s the chain around our necks, the slippery slope to oblivion, and the two-headed beast we are expected to wrestle to prove our worth, part lender and part our own inner yearnings.

It’s all but impossible in today’s landscape to know how to navigate choppy waters of debt, almost impossible as it is for me to find a consistent metaphor for the situation. It’s a headfuck even to the well initiated. To the novice, it’s a game of Russian Roulette. But there is hope.

Unfortunately, I don’t have a miracle cure-all method to get you out from under the weight of your bad decisions. There’s no quick fix. But what I do have is some solid advice that could possibly help you steer clear of utter disaster. The first few points will read like nagging hindsight to anyone already in the thick of it, but they’re worth reading nonetheless.

To start, the most effective way to manage debt is to not accumulate it in the first place. It sounds overly simplistic, but it’s the gospel truth. If you’re just starting out, do it right from the beginning. Translation: do your goddamn homework. Write a business plan. Save, save, save your money and start small. Use credit cards, but only as a way to conveniently pay bills and build your credit. Avoid letting your credit card purchases outweigh your revenue as much as humanly possible.

If you must take a loan, first be smart about from whom you take it. Chances are, it’ll be a personal loan, since most banks are reluctant to even deal with a smoke shop, let alone dump money into the upstart of one. Whomever you take the loan from, make sure you structure it into an arrangement that you can handle. That means first and foremost, get the right amount from the beginning. The last thing you want to do is to ask for the wrong amount, burn through it and then go back to your lender with an open hand asking for more. That puts you both in the worst of positions. This goes back to that business plan. Make sure it’s flawless, that your predictions are as accurate as possible and that it allows room for the unforeseen.

Getting back to the structuring, be sure that your loan doesn’t drain you of your vital monthly cash flow. What I mean is don’t put yourself in a position where you’re having to pay off a loan before you can even cover monthly expenses. Allow yourself time to generate enough revenue to turn a profit, whether that’s six months or a year (probably the latter.) If you can’t find a lender generous enough to agree to those terms, revert to option A; save your money and wait until you can finance it yourself. Honestly, if you can’t put five to ten grand away over the course of a year, you’re going to have a hell of a time managing the finances of a business.

Next, plan your finances and live within your means. The first thing to remember here is that when running an LLC, an S Corp, or a sole proprietor, your personal money and business money are essentially the same. That means cut the fat at home just as much as you do at the shop. Every. Penny. Counts.

Avoid frivolities. That includes anything from a flashy car all the way down to a cup of coffee at Starbucks. If anything comes up that you feel you just can’t live without, don’t be rash. A good rule of thumb is to save three months for anything you think you want, a nicer car, a new phone, whatever. If after three months, you like the money you’ve saved more than the thing you thought you wanted, it’s not worth buying.
Cut your home costs. Bundle your services for a better rate. Or if you find you pay less by piecemealing, do that instead. Whatever drives costs down the most. Take a roommate (make sure they’re reliable). Adjust the thermostat so you’re a little cold in the winter and a little hot in the summer. Call your wireless provider and tell them you want to switch companies and watch their monthly fee magically fall. Don’t even think about a cable package. If you simply must have entertainment at home, open a Netflix account, or even better, Amazon Prime; it’s only $99 a year. Keep in mind that every penny you’re using to pay personal bills is money you’re bringing home, which means more money you have to pay in taxes. Live like a pauper; build a kingdom.

Next are your actual business expenses. Yes, I said they are one and the same, but I’m dividing them for the sake of clarity. Do a cost-benefit analysis on every service you use and cut the ones that don’t stack up. For example, if you’re paying for a dumpster service, you might find that you can save a pretty penny just by throwing a trash bag in the trunk of your car every night and bringing it home to be picked up by the city along with your personal trash. Regarding essential services, negotiate your ass off. You’ll be amazed at what you can save. One effective method is a longer-term contract. You’re not planning to go anywhere, so why not extend that contract for a better deal? I once cut my expenses by $700 a month just by extending my contracts on phone, internet and power. For some of you, that’s half your rent.
This concludes the first half of our two-part series. Be sure to next month’s issue to learn how to save on inventory costs, increase your revenue organically and tackle existing deb.

About the Author:

Chris Black is the owner of the wildly successful Munson’s Emporium in Belton, Texas, the husband of former Blackball Distribution star, Wanda Black, the father of five children and the founder and admin of the Facebook forum, Smoke Shop Owner’s Society, a community of 1,300 industry professionals and growing. When not at work, Chris enjoys spending time with his family, coaching his son’s baseball team, working on his Porsche and viciously trolling those of lesser intelligence on social media.


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