Why Mark Cuban is Wrong about Starting a Business with a Business Loan

Shark Tank has become one of the most fascinating shows on tv regarding Business and Money. One of its current stars is Mark Cuban, he is an entrepreneur who I respect a lot in terms of business development, entrepreneurship and creating wealth. He has also been noted as saying that he would never start a business by securing a business loan. Why would he state that so emphatically? There is the fact that it is better for himself and his show to give capital to entrepreneurs for ownership and equity instead of teach these business owners how to secure business funding, if the entrepreneur figured out how to get business loans then clearly that would not benefit the premise of the show. That said, he may really believe that is an important aspect of starting a business. I think he is completely wrong and I'm going to prove it with some concrete examples. I have started multiple multi-million dollar organizations and each of them got going with some sort of loan or funding that I had to creatively secure in order to get these businesses off of the ground. So from my own unique experiences I can tell you that in order to begin and at several turning points in my businesses the ability to secure capital for them has been a tremendous key. Let's look at a more powerful example of a business loan launching a transformational company.

Ever heard of Walmart, it's highly likely that you have been to Walmart and have witnessed its growth first hand. Years ago it was begun with one store by a great man named Sam Walton. Sam started his first store with a loan of $20,000 and $5,000 he had saved up. He continuously made adjustments and innovations with the discounting methodologies that he would develop over the years to create the largest world retailer in the world and he would never have succeeded at growing it the way he did without constant financing. At one of his first stores he went to a lender for $1,800 to finance an ice cream machine that he used to sell ice cream outside his store and attract new customers. Uneasy he was about the loan, nevertheless it ended up increasing his sales significantly. As he began to grow from his first variety stores to his first full fledged actual big box store Walmart he went around looking for capital from investors. Each investor passed on his business model believing it would not succeed long term. So Sam "borrowed to the hilt" and risked all of his personal assets in order to build Walmart and grow it exponentially. Walmart now has thousands of locations worldwide and had annual sales recently of nearly $500 Billion Dollars. It all started with a loan and was grown with significant funding. Additionally if Sam were still alive today he would be the world's richest man and be valued at 160 Billion nearly double what the current richest man Bill Gates is worth (about $80 Billion) so suffice it to say understanding how to start a business with a loan can be one of the best decisions that a business owner ever makes. Comprehending the best methods to secure growth capital as your business expands can be vital to long term growth and success.