The Curse of Bad Debt

Share Us

The Curse of Bad Debt
24 Dec 2021
6 min read

Blog Post

Debunking an issue of a particular part of society is what entrepreneurs are known for. However, proceeding with their process of converting that idea into a living and working product or service is, in itself, a huge step, which is often overseen by a layman. The most difficult or easy part, which becomes difficult with time, if not dealt with properly, is the part of taking a loan, or as the heading says being held by debt. Young entrepreneurs often get themselves trapped in this marsh. So, let’s check out what is this debt, and how it becomes good and bad? #ThinkWithNiche

There is a pile of instances when taking a loan or giving yourself under the truck of debt is a decision without much contemplation and careful thinking. With the increasing popularity of the usage of credit cards to come up with capital for their business. The flaw also lies in the glorification of entrepreneurship and entrepreneurs. Billboards, newspapers, magazines leave no stone unturned in painting a rosy picture for the young entrepreneurs taking the example of the already built and flourishing entrepreneurs. But the catch here is that the whole picture isn’t shown to these young minds, they are just shown the brighter side of the image and not the darker and shady side of the same.

A talk with any banker will make you sure of the fact that there are numerous stories of young entrepreneurs who seek a high amount of loans for converting their idea in their head into a living and breathing one. Here’s the shady side that's hidden by these billboards, newspapers, and magazines. Out of dozens of startup ideas, only one or hardly two ideas work out and boost like a rocket through the sky. These one or two businesses, although, work as a great source of inspiration, which sometimes muddles the minds of young entrepreneurs.

Another aspect of how this loan turns into bad debt is the usage of the received loan amount. Sometimes, when an idea converts into business, it juggles with our mind about the problem of where to invest and where not to. Often, the mistake committed in this phase is that a lot of money is spent on irrelevant places or things that don’t hold that much importance, at least at the starting point of the business.

What Events Cause This Loan To Become Bad Debt

  • A questionable amount of money is spent on affording a team when you don’t possess enough funds to do so.
  • Similarly, a huge amount is spent on setting up offices, which, although, seems quite necessary, should be delayed until you get your business in proper balance.
  • Failing to understand the way how the market works! A lot of young entrepreneurs fail to get how money works and when does it hit the sky or the ground. A lack of this knowledge leads to a great deal of loss because of the chances of investing at the wrong place at the wrong time.
  • Also, many times it is noticed that the overconfidence of these young minds leads them to this marsh of bad debt. The notion of believing that they are being wise and cautious in their approach can cause a lot of trouble.

So, while starting your business, try to go a little steady when it comes to taking a loan. Take financial advice from experienced personnel. Besides, if possible, you can get an already stable entrepreneur to let you know the whereabouts of the loan and the whole process. After all, this takes time for your contemplation and then proceed by taking the right amount of money for the right amount of time with an affordable rate of interest.