If you’re a reader of our blog, chances are that you own a small business. If you own a small business, chances are the you’ve accumulated some debt in the process of building it. Starting a business costs a lot of money, taking loans is something we’ve all had to do, yet no one wants to talk about debt. It’s understandable of course, because thinking about how much you owe the bank, or even worse, other individuals will make any business owner sweat. But avoiding the subject is exactly what puts you deeper in the hole. That’s why we’re going to discuss it right here, right now.
There are a lot of different ways to deal with debt, and we always suggest speaking with a financial adviser to get a better understanding of your specific situation and find a solution. However, these 5 tips will help anyone on the journey to a business without debt:
1. Knowledge is Key
If your debt is consistently climbing, you need to immediately reassess the reason. Do not chalk this up to “the way it has to be” as there are always solutions to getting out of the red. Clearly, your business is spending more than it’s making. Start by looking at your largest expenses for a better understanding of where your money is truly going. These will be the easiest to diagnose, but be careful not to underestimate your smaller spending. Most businesses have a lot of small and often unnecessary expenses that add up very quickly. It’s likely that a lot of these can be forgone and even more likely that you’ll be surprised by how much money you save once you get rid of them. Look at what is absolutely necessary for your daily operations, anything else should be scrapped in favor of reducing debt. Remember, debt reduction should take the highest priority.
2. Increase Cash Flow
If only it were so easy, right? If increasing cash flow were that simple, you wouldn’t be in debt in the first place. But you shouldn’t discredit this thought too quickly. There are actually some simple solutions to do this. As discussed above, cutting costs should be the first point of resolution. Next up you should consider raising prices. As we discussed in a previous blog Why You Should Be Charging More Than You Are, there’s a good chance you’re not charging enough. This will be the quickest way to increasing cash flow and getting you on the right track to crushing debt.
3. Revisit Vendor Terms
If it’s been a few years since you took your loan, you should head to the bank and see if you can re-negotiate your terms. This is very common practice and banks are more willing to do this than you might think. This is an easy solution to making your debt more manageable and at the very least, you should always know what you’re options are. A warning; re-negotiating a loan will often lead to higher interest rates over time. So while your monthly payments may be reduced, you will likely pay more in the long run. Just be sure to consider the option best for your business.
4. Consolidate Your Debt
Just like number 3, this is one that should always be discussed with a financial adviser. Consolidating your debt can take all of those pesky payments and convert them into one, easy to manage, and often lower monthly payment. But things are never as good as they seem and these always come with caveats, so be sure to do your research and speak with your adviser about your options.
5. Use Handlr
Handlr can help you organize, manage and simplify your business. Our easy-to-use dashboard can automate your scheduling, team and customer management. While our customer app will increase your booking rates and customer satisfaction. This will save you time and money allowing you to focus on the most important issue in your business; getting rid of your debt. Apply for Handlr here: https://myhandlr.com/apply-now/