How to Start Your eBay Business Without Credit Card Debt

August 24, 2007

Do you want to start your own eBay business with minimal risk and no debt? I’m sharing the steps I took to build my eBay business and giving away a free multi-part tutorial on how to get started. Sign up for the free tutorial with the adjoining form and get started today!

Is it wise to go into debt when you’re starting a business? Do you have to borrow a chunk of money or is there any other way get started? I had a reader email me in response to my post on using credit cards to buy eBay inventory.

“Many small businesses use credit cards to fund their initial expenses.  A lot of times when you’re just getting started you need some seed money and credit cards are a simple way of getting it.  Sure there’s the risk you’ll carry a balance for a while until you become profitable but isn’t assuming risk just part of doing business?”

Startup Money
The saying goes “it takes money to make money”.  The good news is you don’t necessarily need a lot of money to get started.  The very first thing that Guy Kawasaki tells us in the “Art of Bootstrapping” is to focus on cash flow.

“Focus on cash flow, not profitability. The theory is that profits are the key to survival. If you could pay the bills with theories, this would be fine. The reality is that you pay bills with cash, so focus on cash flow. If you know you are going to bootstrap, you should start a business with a small up-front capital requirement, short sales cycles, short payment terms, and recurring revenue. It means passing up the big sale that take twelve months to close, deliver, and collect. Cash is not only king, it’s queen and prince too for a bootstrapper.”

Bootrapping on eBay
eBay fits Guy’s requirements pretty well. You can start off only selling one or a few things so the up-front capital requirement is small.  Auctions can last 3-10 days so the sales cycle is short, unless you sell in an eBay store which may have longer inventory turns. You can set your own payment terms, if you only accept PayPal then most people pay within a day or two of winning the item.  The recurring revenue of course depends on you finding new products to sell but the good news is products are everywhere.

Why Go Into Credit Card Debt?
The reader mentions that many small businesses use credit cards to get started. While this may be true, I would ask, why take on high interest debt when you don’t have to?  You can actually be profitable and have positive cash flow after your first sale on eBay, why go into debt that will just eat into your earnings? 

Of course, the way to keep initial capital requirements small for an eBay business is to start only selling a few things.  As you make money on the initial sales, you can re-invest the profits into additional inventory and grow the business without debt.  If someone is looking to start out with tons of inventory and sell hundreds of dollars of goods a week right off the bat, they may have to borrow money up front.

Alternative Funding
If you don’t want to go into credit card debt to start making money online you can always pursue other, less expensive funding sources such as taking out a second mortgage, dipping into personal savings, borrowing from friends or family, taking out a bank loan, or borrowing on Prosper.

eBay & Prosper
eBay is actually hosting a Prosper forum today for people interested in borrowing startup money on Run by Prosper Marketing Director, Shira Levine, it will go over some of the basics of small business finances. Here is summary of the forum:

“We’ll cover the five basic questions every business should ask themselves before you finance, how to know where you stand financially, and the importance of cash reserves in your company. Then we’ll cover financing basics: debt vs. equity, credit scores and reports, and common pitfalls to avoid. The workshop will end with how to create an excellent loan listing on Prosper that will get your business funded.”

Credit Card Funding
Of course everyone’s situation is different and using a credit card as a funding source might work out for some people.  However, if you want to avoid high interest charges and are willing to start small and grow your sales over time then it’s possible to start making money on eBay without going into credit card debt.  Are there any other alternative funding strategies that I missed?


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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7 Responses to How to Start Your eBay Business Without Credit Card Debt

  • Nigel

    I ran a ebay business for 3 yrs . It was very rewarding and it allowed me to work from home. I recommend you start this way. As you grow bigger you will spread your wings. I made 300K in my first year so we are not talking chump change but even if your looking for 50K per year ebay will definitely do it for you.


    Nigel, AU

  • Mohammed Sajid

    I am started a ebay business now and I haven’t credit card I sell a my item in world or not if sell what is a procedure

  • James

    A way a person get get money from ebay is sign up to be their affiliate. Then you go to craigslist and find people that are looking for the same info and send them your affilaite link to ebay for the same product. When they buy the item you get paid. Simple and any one can do it even a 12 year old.

    Good Luck to what ever to venture on doing either on Ebay or anywhere else.

  • Bruno

    August 24, 2007
    Top of page for post date.

  • Branko

    well im 12 and i dont have a creditcard yet but is there any way to have a ebay buisness with out a credit card (by the way im mature for my age 🙂

  • Ben

    Angie, I apologize about the date confusion. The forum was on 8/24. I’ll get dates added to my posts this weekend.

  • Angie Hartford

    This forum on eBay sounds very interesting. However, since the post isn’t dated, how do I know I didn’t miss it yesterday?