The Timely Perspective: Should You Borrow Money to Start a Business? Mark Cuban’s Advice Sparks an Important Conversation

Helping entrepreneurs separate popular business advice from practical business decisions.

See Mark’s video here first: If you take out a loan to start a business, you’re a Moron!

Should You Borrow Money to Start a Business? Mark Cuban’s Advice Sparks an Important Conversation

Recently, billionaire entrepreneur Mark Cuban reignited debate among entrepreneurs when he made a blunt statement that quickly spread across social media.

“If you’re starting a business and you take out a loan, you’re a moron.”

Like many memorable business quotes, it attracted attention because of its boldness. But beneath the headline lies a much more important discussion, one that every entrepreneur should have before signing a loan agreement.

At The Timely Entrepreneur Resource and Research Centre, we believe Cuban’s comment deserves careful examination. Not because every entrepreneur should agree with him, but because it forces business owners to ask a critical question:

Should you borrow money before you’ve proven your business can make money?

The answer is not always straightforward.

What Was Mark Cuban Really Saying?

Contrary to what many people assumed, Cuban was not arguing that borrowing money is always a bad idea. His point was that starting a business is already filled with uncertainty. Taking on debt at the very beginning adds one certainty, the loan must still be repaid whether the business succeeds or fails – every month, the bank expects its payment, the credit union expects its payment, the finance company expects its payment, your suppliers expect their payment, your customers, however, are under no obligation to buy. That imbalance is what Cuban was highlighting. A loan does not create customers; it does not guarantee sales; it simply creates another financial obligation that the business must satisfy.

 Many aspiring entrepreneurs begin their journey with one question: “Where can I get funding?” While financing is certainly important, we often believe it has become the first question when perhaps it should be one of the last. Too often, businesses seek loans before answering more fundamental questions:

Is there genuine demand for the product or service? Have customers already shown a willingness to pay? Does the pricing cover all operating costs? How much cash will the business require each month simply to survive? What happens if sales are only half of what was projected? Without answers to these questions, borrowing money can amplify uncertainty rather than reduce it.

Money Does Not Solve Every Business Problem

One of the biggest misconceptions among new entrepreneurs is that a lack of money is the primary reason businesses fail. In reality, many businesses struggle for reasons that additional funding alone cannot fix. These can include:

Poor pricing.

Weak record keeping.

Limited market research.

Poor customer service.

Inadequate marketing.

Cash flow problems.

Failure to understand the numbers.

Giving these businesses more money often delays the problem rather than solves it. Imagine pouring water into a bucket with several holes. Adding more water does not stop the leaks. The leaks must be repaired first. Businesses operate much the same way.

Borrowing Before You’re Ready

One situation we encounter regularly is the entrepreneur who wants to borrow to purchase expensive equipment, rent a large office or invest heavily in inventory before making their first sale. Now there is certainly nothing wrong with ambition. The danger lies in assuming that investment automatically creates demand. Customers do not buy because you’ve purchased expensive equipment. They buy because you solve a problem, they are willing to pay for. Many successful businesses began with modest resources. They reinvested profits gradually rather than borrowing heavily from the outset. That approach reduced financial pressure and allowed the business to grow at a sustainable pace.

But Is Borrowing Always Wrong?

Not at all. This is where context matters. There are many legitimate reasons for businesses to borrow. A manufacturing company may need specialised machinery. A transport business may require commercial vehicles. An established retailer may borrow to expand into a second location. A growing business may need additional working capital to fulfil larger contracts. These are very different situations from borrowing to test whether a business idea might work. The difference is that an established business has evidence: it has customers, it has sales history, it has financial records, it understands its market. In these circumstances, financing often becomes a tool for growth rather than survival.

Borrow to Grow, Not to Guess

Perhaps the most useful lesson entrepreneurs can take from Cuban’s comments is this:

Borrow to grow a proven business, not to guess whether an unproven idea will succeed.

Before approaching a lender, ask yourself:

• Have I already tested this business idea?
• Do I understand exactly who my customers are?
• Have I priced my products or services correctly?
• Can I realistically meet loan repayments if sales are slower than expected?
• Have I explored lower-cost ways of starting first?

These questions are often more valuable than the loan itself.

A Better Starting Point

Many businesses today can begin much smaller than entrepreneurs realise. Consultants can start with virtual advisory sessions. Tutors can teach online before renting classrooms. Retailers can validate demand through social media before investing in large quantities of stock. Service providers can begin from home before leasing commercial premises.

Testing an idea on a smaller scale allows entrepreneurs to learn what customers actually want before making significant financial commitments.

The Timely Takeaway

Mark Cuban’s statement may sound harsh, but it highlights an important truth.

Money should support a good business. It cannot create one.

Before borrowing, entrepreneurs should ensure they understand their market, know their numbers and have evidence that customers are willing to buy. Debt is neither good nor bad. It is simply a financial tool, which, if used wisely, can accelerate growth. Used too early, it can magnify risk. The goal should never be to borrow as much as possible, but it should be to build a business strong enough that financing becomes an opportunity rather than a necessity.

How We Help

At The Timely Entrepreneur Resource and Research Centre, many entrepreneurs approach us asking where they can find funding.

Our first response is often another question:

“Is your business truly ready for funding?”

Through our Business in Trouble (BIT) Sessions and business advisory services, we work with entrepreneurs to assess business readiness before they assume additional financial obligations. Together, we review business models, pricing, cash flow, profitability, financial projections and operational readiness, helping business owners make informed decisions rather than expensive mistakes.

Sometimes the best financial decision is not borrowing more. Sometimes it is building a stronger business first.

Helping businesses start, survive and grow.

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