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."

But finding an investor or mentor is part of the challenge of the start up experience.

"Most of us are flattered when asked to share our knowledge but the mentee should seek ways to provide value to the mentor so that the relationship, like all healthy ones, can be mutually beneficial," said Tracy Benson, CEO with On The Same Page, a business consultancy.

Johnson maintains three mentors and advises budding entrepreneurs seeking to launch a business to look among friends, family and co-workers.

"Take inventory of who you know," said Johnson who volunteers with a non profit called Young Faces Smiling Organization. "Jot down their occupation, make a priority list and begin setting up lunch or coffee. Always treat the first time."

Prior to launching his own business, Johnson worked at the marketing and advertising department of Def Jam, Universal and Warner Music Group.

"I don't live life or do business with regrets but if I were to do it all over again I would do more research on those that failed in this industry," Johnson said. "That would have made it easier to see the roadblocks before they smacked me in the face."

-Written by Juliette Fairley for MainStreet

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