Second job could help save entrepreneur's debt-ridden startup

Your Business Credit columnist Elaine Pofeldt
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for

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Question Dear Your Business Credit,
I am trying to understand my situation and where to go from here. My husband opened an LLC business in April 2015. He has had very little success and acquired about $21,000 in credit card debt. We're getting to the point where it is hard to pay the minimum payment on the credit card, pay the company expenses, and provide for our own expenses. What can we do with this current credit card debt? We don't have the means to pay for it. -- Jodi

Answer Dear Jodi,
Your first priority should be to listen to your instincts and stop the bleeding. Your husband needs time to make the business work. However, you have an immediate problem: Your family has racked up debt you can't afford to pay. Continuing to take out more debt to keep the business going is not sustainable financially. Plus, it is putting you under a lot of stress.

So how do you stop the bleeding? It will require you to work as a team to bring in more money, assuming you are both on board with his continuing to run the business. If your husband is working on the business full time, maybe he needs to scale down to part time on the business and get a full-time job for a while. Perhaps you can earn some extra income, too. Most of us have some skill that can translate to freelance income, whether that is driving for Uber or consulting in our field.

Getting -- or keeping -- a day job isn't a sign of failure for an entrepreneur. It is what most business owners do during their first year in business. Among owners of businesses that are 1 year old or less, only 38 percent said they rely on their startup as a main source of income, while 54 percent reported depending on another job, according to a 2014 poll called the Sam's Club/Gallup Microbusiness Tracker. That changes only when the businesses get into the 2-to-5-years-old range. By that point, 51 percent of owners rely mainly on income from the business, and only 44 percent depends mostly on another job.

Even if you both bring in more income, you will probably also need to make some lifestyle changes if your ultimate goal is to rely on a business for income. Money in the bank is your friend when you are self-employed. It protects you from ups and downs in the economy and fluctuations in sales.

Many people run into problems in self-employment because they became accustomed to living slightly above their means while they had a W-2 job, relying on their next paycheck to stay a step ahead of their bills. That doesn't work when your paychecks don't come every two weeks. You need more cash in reserves. I know this from experience. My husband and I both are freelancers and support four children from our businesses. How much you need depends on your lifestyle and financial obligations.

You're in a jam right now, but it is very much in your power to turn things around if you work as a team. It will not be easy but if you work together to give your husband a chance to succeed and stabilize your finances simultaneously, I am confident you can turn things around.

See related: 5 steps to prepare your finances for a startup, Should you get a credit card for your new startup?, Need a small-business loan? Beat the big-bank brush-off

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Updated: 12-14-2017