The Argument against Credit Cards for Small Business Expenses

The use of credit cards for your small business can be detrimental, and it's best to avoid using them. The reliance on credit cards to build up a business is a shaky foundation that will negatively affect not only your business but also your household. Entrepreneurial success is based in part on hard work, and credit cards reduce or eliminate your drive to be diligent. Forget the propaganda and marketing materials you've read or heard to date about how wonderful it is to use a credit company while building a business. Consider these arguments against using credit cards for small business expenses.

The Easy Road to Bankruptcy

Too much credit card debt can lead to your making a decision to file for bankruptcy, which can ruin your life for seven years or more. If small business owners were so disciplined with their use of credit cards for a small business, credit card companies would be out of business. The truth is that a lot of psychology and marketing goes into designing a credit card that will prey on your weakness, and even the most disciplined entrepreneur may not overcome the temptation to use it to make purchases. Small business expenses add up and can take 30 years to pay off. If your business fails, you may not be motivated or have the ability to pay off those credit cards. History shows that the end result for many small business owners is bankruptcy, and that's not a risk you want to take. 

Higher Small Business Expenses

Studies show that you are more likely to spend more on small business expenses using a credit card than you are with a debit card, check or cash. Controlling your expenses is the key to effective money management in business. Not handling money well is the primary reason small businesses fail. If using credit cards for your small business leads to overspending, then common sense dictates that it's not a good idea. When you reduce expenses, you can increase profits to grow your business. Otherwise, your competitors who keep their costs down will beat you every time.

Leads to Poor Business Management Practices

Credit cards for small business are seemingly a quick fix to problems. You end up relying on your credit cards, instead of creative solutions to problems. The business problems you face are not new. Other entrepreneurs have solved such problems in the past, without using credit cards. You hamper your ability to manage your business, and you develop poor habits if you avoid solving those problems, which is exactly what you do when you use credit cards. There are ways to run a business with little money, and you may have to start small before you can grow big. Credit cards are not a way to get rich quick but, rather, your way to get poor faster.

This argument may seem harsh, but the harsher reality is the financial ruin that comes to many entrepreneurs and their families who have been taught that credit cards for small business are a necessity or a great idea. There are better ways.

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