Sometimes as a business owner, your company accumulates debt. And managing business debt can be difficult. Try to take some business debt management steps before you are forced to close your doors for good. If you truly want to climb out of your ravine of debt, then here are ten steps you can take to manage your debt;
Assess and Rework Your Budget; before tackling business debt, you need to have a solid understanding of your current financial situation. Assess how your business budget is operating. Is it covering all the bases, or operating in excess? A good business budget helps to identify income sources; fixed daily, monthly, and annual costs; and accounts for all variable expenses such as rent, or other unforeseen costs. Assessing and reworking your budget should be the first step in forming an action plan for reaching your debt-elimination goals.
Reduce Expenses; once you take stock of your budget, take a look at your operating costs. Do you have any excess expenditure you can do without? Decide which services and operations are absolutely necessary for the daily operation of your business, and cut the rest. Use your financial statements to help pinpoint expenses contributing to your debt. Cutting costs is a sure-fire way to increase cash flow and reduce surmounting debt load.
Prioritize payments; you cannot manage your business debt overnight. You need to decide which debts to tackle first. Make paying off loans with the highest interest rates a priority. The higher the interest rate, the more you end up paying, and the longer it takes to pay the loan. Also, put paying debts with a personal guarantee at the top of your to-do list. With these terms, creditors can take your personal assets if your business cannot pay.
Increase your earnings; as you pay liabilities, continue to grow your business. Boosting cash flow can help with long-term goals beyond business debt management. Use collection strategies for a more predictable projected cash flow. Even if you are struggling to pay debts, promote your business to increase earnings. Use marketing methods that offer value to your brand without breaking the bank. Another way to earn extra income is to lease space or equipment. Depending on your location, you may need a special leasing permit.
Do not borrow more; this step may seem super obvious but you will be surprised at the number of people who borrow more debt to pay off existing debt. Do not become part of this group. You will be shooting yourself in the foot twice. Consolidating loans are not the best answer.
Speak to us at Korsell Corporate Consult; let us assist you with your business planning and other custom service. Call now 055 391 9618 or Email: info@korsellcorporateconsult.com