Ask The Money Coach

Q: I’m Trying to Start My Business, a Small Barbecue Restaurant. I Have Taken Business Classes at the SBA. We Are Taking a $10,000 Loan From My Husband’s 401(k), and We are Using $8,000 Cash That We Saved to Start the Business. I Want to Know: Are We Taking the Proper Steps?

A: It sounds like you’ve made some smart financial and business moves in preparation for entrepreneurship and your efforts thus far are to be commended. You stated that you didn’t want bank loans, but you were savvy enough to educate yourself and take business classes at the Small Business Administration. I’m sure the information you learned in those classes will prove helpful in your future endeavors. While I generally don’t like to see people take 401(k) withdrawals for things like paying off credit card debt, I do think it’s OK to use 401(k) money for investments, like launching a business or perhaps buying your first home. Additionally, it’s great that you’ve been able to save up $8,000 specifically for the new business. That tells me that you’ve been dedicated to this process and have been willing to sacrifice to give your business the best possible chance at success. You probably already know that the restaurant industry can be challenging. But if you start small, as you’ve planned, keep our overhead and debts low, and do your market research (as I’m sure you’ve done), I think you’ll beat the odds and have a very successful enterprise.

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