The effects of debt on entrepreneurs and 9 steps to get out of it
By Twapewa Kadhikwa
Being indebted feels like having the chain wrapped around your neck that is slowly sucking the air out of your lungs, and if you do not take charge of your narrative on what you believe and tell yourself, you will start to lose your breath, your identity and ultimately lose your mind.
If you went into a trap of debt because of your business, this does not mean that you are a failure and not a criminal, despite what your bank manager makes you feel and what the intrusive thoughts in your mind keep telling you. I want you to know and believe this because no one can do this for you.
At this stage, your bank manager thinks you are irresponsible and have squandered their monies, your creditors think you are lying to them when you say you are experiencing cashflow challenges, your suppliers are nervous, and your family members, not all, but some, are laughing at you, your employees doubt you and your competitors are just sitting and waiting for your downfall like vultures.
You did not use that money for personal joy, recreation, or immoral conduct, and should not be so hard on yourself. But if you did, then we need to deal with that immediately! In all honesty, you got into the trap of debt because something did not work out well for you in your business. In business, things go wrong. We face a lot of challenges, some of which we have control of and others not. We operate in an economy that is characterized by factors, micro and macro that you have little or no control over.
You did not create the severe drought that Namibia experienced in 2018, you did not cause the economic recession, you certainly did not create Covid 19 and all else, and sadly, some creditors want to recover their monies casting a blind eye to these realities. What a tragedy. It has taken me a lot of time and introspection to reconcile with these realities and ultimately pen this piece.
The most painful one is that the society we live in is so unfriendly to defaulters. It judges you and concludes that you are irresponsible and not trustworthy and this affects you and your business moving forward. As an entrepreneur, trainer, author, and mentor, I am approached daily by other entrepreneurs, start–ups and existing ones battling with this demon and I want to provide support, counselling, and guidance out of this muddy place you found yourself.
The main effect of debt in the life of an entrepreneur is that it corrodes your confidence, and you begin to feel a lot of shame and self-doubt. Do not wallow in this, as it is a dangerous and unfriendly place.
9 steps to get out of it
It is hard, but accept that you are in debt. Accept it as soon as possible so that we can start to address it and walk our way out of it. You cannot start addressing your debt if you have not
accepted it as a reality.
2. Forgive yourself and forgive others
When you are in a trap of debt, it is very easy to blame yourself and others. You need to forgive because you need your energy, if you do not forgive both you and others, this drains your energy, and you need it to focus and revive your business. I did that for a while. I blamed my bank manager, blamed the system, and blamed former employees, and former business partners. It took me a long time to forgive myself but when I did that, loads of pressure came off my shoulders.
3. Adjust your lifestyle, quickly!
Things must change, to get new results, you must do different things. Unfortunately, things must change to get new results, and you must do different things. Unfortunately, you can’t keep going the same way as, there may be a need to adjust your lifestyle, change your priorities, change how you manage your money, change how you spend money, and redefine your financial personality.
4. Beware of the trap of desperation
Sadly, when we go into debt, we become so vulnerable, even our prayers change and we pray that you get a huge break to repay this debt. You stand the risk of getting into the trap of get-rich-quick methods, running to all meetings that promise quick and high returns, joining shady pyramid schemes, and scoping for opportunities that give you a massive income at once so that you can pay your debt.
5. Communicate with courage
Make a list of the people to whom you owe money, set up appointments with them, and go and see them. With courage, dignity, and humility, apologize for the inconvenience caused and share your plans with them. Honor those plans and if you get stuck, communicate again, tell them you are not a criminal or dishonest. Ask for the required time you need to repay your debt.
6. Become financially literate
It is no secret that society at large has poor financial literacy skills, especially in black communities. It is worse with entrepreneurs because many don’t even understand the financial lingo and how this affects the different areas of their businesses.
7. Focus on rebuilding your business based on your strengths
It is not opportunity that makes you money, it is capability. This is the time to take stock, do a complete SWOT analysis of your affairs and identify your competencies. Do not rebuild your business based on hearsay, rebuild it based on facts, your competencies, using your experience, and leveraging on your network.
8. Repay your debt – but not from everything that you earn
You cannot repay your debt from everything that you earn, despite how desperate you are. You need to live too, of course, within the right means. Many entrepreneurs out of desperation and frustration commit all their income to servicing debt, this is dangerous and you will be back in the debt trap very soon. I advise that you keep a part to repay your debt and keep a part to live on.
9. Learn your lesson
What a pity it will be to have gone through all this, the emotions, the negotiations the stress, embarrassment, and frustrations, and walk away without wisdom. I hope you learned your lesson or lesson. There are always two sides to a story and regardless of how you got into the trap of debt, you also had a part to play in it. So, learn your lesson. Improve your skills, change your habits, adjust your lifestyle, and start to rebuild your life and your business.