Entrepreneurs Need To Take On Different Kinds Of Debt To Succeed
You know about financial debt, but what about the other options?
In Teaching Startup this week, technical founder Matt Lavin answered an entrepreneur’s question about managing technical debt. It was a great answer, and I learned something. But one particular bit actually had me nodding my head vigorously in agreement:
“As a developer myself, I’ll say something blasphemous: Technical debt is not inherently bad. Businesses often take on financial debt to move quicker than without it. From a business perspective, the debt-free approach is not always the best idea. Like financial debt, you need a plan to make sure your debts are managed and not growing out of control.”
Yes!
While Matt went on to explain the different kinds of technical debt and how to erase them, I’d like to take a couple minutes to talk about the concept of how an entrepreneur can and should be leveraging different kinds of debt.
Financial debt is a pretty simple concept. Your startup needs raw materials, labor, and equipment to get off the ground. So you pay for it yourself or borrow the money from someone else against the eventual returns of the business.
