There’s a simple question that tells you which kind of debt you’re carrying.
Why are you borrowing?
Are you borrowing because you’ve modeled the return on a specific opportunity and the numbers work?
Or are you borrowing because you can’t afford inventory, can’t make payroll, or need to bridge a gap you didn’t see coming?
If it’s the second one, that’s survival debt, and it’s a warning sign.
Over half the ecommerce owners we surveyed told us they aren’t using debt strategically at all.
Most of them are either avoiding it entirely, which means missing real growth opportunities, or using it reactively, which creates a spiral that’s hard to climb out of.
Only about one in ten use debt strategically, and they know exactly how the borrowed money will create profitability.
How? They’ve already forecasted the return.
They’re not guessing or hoping because they know already.
The real difference is whether you know what debt is actually doing for you before you take it on.
If you’re not sure which category you fall into, here’s a simple test.
Pull up your last loan or credit line.
Can you point to the specific return it’s generating?
If you can’t answer that clearly, it’s worth taking a hard look at why that debt exists in the first place.
If you’d like help figuring out whether your debt is working for you or against you, reach out and get on our wait list.
Cyndi
|
One question before you go I am revising my current book, Profit First for Ecommerce Sellers, and I don’t want to write it from research alone. I want to write it from what is actually happening in your business. Could you help me out by answering the below question?
Which lenders are you currently using in your business today? |
|
|
|
|
|
|
|
|
Quick Summary
- Ask why you’re borrowing: a modeled return on a specific opportunity, or a gap you didn’t see coming?
- Over half of surveyed ecommerce owners aren’t using debt strategically at all.
- Most either avoid debt entirely and miss growth opportunities, or take it on reactively and end up in a spiral.
- Only about one in ten owners use debt strategically, with a forecasted return already known before borrowing.
- Simple test: pull up your last loan or credit line and see if you can point to the specific return it’s generating.
Frequently Asked Questions
What does it mean to use debt strategically in an ecommerce business?
It means borrowing only after you’ve modeled the return on a specific opportunity — new inventory, a product launch, or equipment — and confirming the numbers work before you take on the debt, rather than borrowing to cover a shortfall you didn’t plan for.
What is survival debt?
Survival debt is borrowing to cover a gap you didn’t see coming — can’t afford inventory, can’t make payroll, or an unexpected cash shortfall. It’s reactive rather than planned, and it’s a warning sign rather than a growth tool.
How do I know if my debt is working for me or against me?
Pull up your last loan or credit line and ask whether you can point to the specific return it’s generating. If you can’t answer clearly, that’s a sign the debt was taken on reactively rather than strategically.
Why do most ecommerce owners avoid debt entirely?
Many owners have only seen debt used reactively, so they associate it with risk and avoid it altogether — which often means missing real growth opportunities that a modeled, strategic use of debt could have funded.
Reach out to Your Profit Team if you’d like help figuring out whether your debt is working for you or against you.
