How to Launch a Startup Without Debt

NEW YORK (MainStreet) —De'Von Johnson started a publishing company called Bleu Life Media using savings from his 401k plan rather than dip into debt.

"It was enough money to print our first issue," Johnson told MainStreet.

He also took in a roommate and ate out of his mother's refrigerator in Long Island.

"It wasn't my plan A," Johnson said. "I had good credit and assumed banks would easily lend me money but my timing could not have been worse."

The Harlem resident published the first issue of Bleu seven years ago during the economic crisis and has since replaced the $15,000 he withdrew from his retirement plan.

"I cut back on social activities and used all free time to work on the business," said Johnson.

His firm has since widened to include a sister publication for women called as well as Bombshell, Bleu TV, Bleu Digital and a sneaker and street wear line called LACED.

Johnson is among the 54% of millennials who either want to start a business or already have started one, according to the Kauffman Foundation. Today's digital age makes it easier than ever before to launch a business and market it to the world. Funding, however, is often an obstacle.

"Certainly you can self fund the operations of a start up, if you've got the working capital to do so but this means you'll be taking money from your personal savings and using it in lieu of money from a bank, a credit card issuer or an investor," said John Ulzheimer, expert with

Some businesses cannot be launched without getting into some form of debt to pay for expenses, such as office space, office equipment, insurance, permits, websites, construction, utilities, travel expenses and personnel.

"The cost of goods can become so expensive that taking on an investor or borrowing a large amount of money from a business lender might be necessary," Ulzheimer told MainStreet. "That's not to say using debt to start a business is a bad idea. It's just something you have to control and plan for relative to your expected revenues."