I just was a novice teenager with an entrepreneur’s mindset. I was trying to survive at all costs.

I was a young college student trying to get a few pennies to complete the college’s tuition and put food on my family’s table at the same time.

I didn’t realize I was falling apart financially. I was getting into debt slowly without noticing. I was compromising my financial future too early.

I was blind at all. I was making three big financial mistakes that held me back to not give up at the right time.

Back then I was running three small businesses — a small fast-food restaurant, a small consultancy, and training agency, and a small retail business.

I launched them one after another with the same hope.

Yet, after a few years, the outcome was the same — a big failure, and sunk into a huge debt.

A common mistake new business owners make

There’s no doubt that all the previous is the result of a common mistake new business owners make.

We all have the wrong idea that if we keep a relentless passion and a fixed mindset about our business idea, we will survive and keep our business alive.

With this fixed mindset is it impossible to give up even under the worst scenarios.

Our passion and belief for our business are so strong that we are blinded by optimism and make our current financial situation blurry so that we force the process to keep rolling it at all costs.

I am not saying that you shouldn’t be persistent and passionate about your business, you must, at all.

Yet, whenever you are falling into the next three bad financial mistakes, you will finally understand why they are clear signs that it is time to step away.

It’s time to make a full stop.

An abrupt stop and give up on your business idea is the only option.

1. Injecting your own money

Putting personal money might be a smart decision whenever you are starting your business and when there are no investors nor external funding. You can leverage from a special “seed fund” — your personal money.

In that context, the only option we have is to withdraw and put our personal money to work. This could be either just a part of it or all of our savings to start rolling our company.

Yet, once your business is running it is a terrible idea to start injecting personal money to keep your business alive.

It’s the worst financial decision you can make. Let me tell you my own experience.

I’ve been trying to build businesses since I was young. I failed in all of them, miserably.

But I would like to talk about the three bad experiences in where I believed that injecting my own money was a great idea.

The worse time to do it. Back then, I had a really low job salary. I did this several times, which created the debt-snowball effect without being aware of it.

Nowadays, I am still suffering part of those side effects.

2. The trap of the endless refinancing and consolidating loan cycle

First thing first. Refinancing a loan means taking out a new one to replace your existing one. This sounds pretty simple, right?.

The reality is that you are being a victim of an endless refinancing loan cycle.

In theory, you are trying to make a good deal to get more favorable terms — low-interest rate, take a breath on your monthly payment.

No doubt, that’s your final intention, but the outcome is the same with more debt.

Due to my lack of financial education, I ended up making the same financial mistakes in three consecutive small businesses.

After some time, I started out to seek ways of refinancing my loans. I believed it was a smart decision. It didn't at all.

This endless cycle hit me strongly. Therefore, it’ll do sooner than later on your side if you are doing the same, hopefully not.

Thanks to that, I fell into huge debts, I stumbled upon huge problems, with my business closed and disappointments around my short business life journey.

I just wanted to keep my business alive and rolling it at all costs. I didn’t give up on time.

3. Creating the debt-snowball effect

Refinancing and consolidating loans as well as injecting my personal money created the debt-snowball effect without being completely aware of it. Or at least I didn’t want to accept it at that time.

You won’t let me lie, we perfectly know it, but there is a little hope that your next refinancing or consolidation deal will be much better, and you will finally find a way to get out of that hell.

However, what I realized, it’s exactly the opposite. The more you consolidate or refinance your debts, the more debt you are getting into.

They start to increase quietly and exponentially.

Ending Thoughts

Certainly, experiences are the best school.

We learn a lot from making those big financial mistakes as new entrepreneurs.

If you are starting out your entrepreneurial journey, I encourage you not to fall into this. It will stress you out and rob your peace.

We shouldn’t realize and give up until we have got into huge and debts. It’s really painful.

It will make you feel like a total failure. You aren’t.

Finally, we should be able to figure out the real business’s illness. Most of the time is an optimistic or unrealistic plan or in the worse case, a zero plan.

Our passion and optimism blind us, and we don’t see those things are coming in.