Taking control of your business debt is critical to its success. And if you don't control your business debt, it could very well control you. Take the reins and shed some unwanted debt so you can focus on what your business has in store for its future — not its past. Here are 7 ways you can take control of your business debt:
When you were in the startup phase, your budget was a bit more flexible because you typically have cash to work with. Now that you are beginning to pay interest on your initial loans, you may have to reevaluate your daily business spending. Tighten up on your expenses from petty cash to daily coffee and other additional unnecessary office expenses. Also approach your vendors and see if they are willing to give you better pricing on your recurring orders with a contract. All of these savings can add up and be put toward increasing your monthly loan payment so your business can be free of debt sooner.
Just as your vendors are diligently sending out your invoices monthly, you also need to be sending yours out to your customers. Getting sales locked in and products sent out it is just as important as the ability to collect the payment from your customers. You may even want to look into giving additional discounts to customers that prepay for their products or services. You don’t want your bookkeeping to be what holds your business back from stepping up your growth potential. Managing your cashflow can lead to better debt management, too. After all, you can't repay your debts if your business isn't earning money. Related: How to Get Clients to Pay Overdue Invoices
Reviewing your current loans could present an opportunity for either adding in additional small business financing options or modifying your current one. Review you current loans for opportunities to reduce your fees and APR. You may be able to consolidate your debt at a lower rate. Additionally, you may qualify for a new loan at a lower rate, which could be used to update outdated operating systems, update or increase equipment and increase inventory, all of which could increase your revenue in the long run.
If traveling for your business is needed, utilize the benefits of business credit cards that specialize in travel so you can earn points or cash back. By earning sign-up bonuses and accruing points for business spending you are already budgeting for each month, you will be able to save on airline flights, fees and hotel costs needed when traveling for business.
Your main objective in business should be to reach and keep customers so they continually select your small business over the competition. Asking for feedback and rewarding customers for their loyalty will do just that. Branching out to other businesses and offering bundled products and shopping options can bring an entirely new definition of custom and sleek options to your clients. No matter how you do it, focusing on increasing sales will have a direct impact on your business's ability to repay and control its debts. Also: Can't Get a Business Bank Loan? Here Are 4 Alternative Options
Your biggest asset is is a well-operating and functional staff. This can be improved by hiring more good people in roles that are needed, improving the performance of existing staff and reducing any staff in roles that are no longer needed or are underperforming. You may want to also look at the procedures and workflow of your staff and see if you need to make internal changes to save time and money. Are the forms or programs you are utilizing that are obsolete? Are you paying for two different programs that have similar functions? Allow your staff to also give you feedback and suggestions for ways to improve their positions and teamwork. By improving efficiency and happiness among your staff, you can improve company performance and use better profits towards controlling your debts.
Business can and will continually eat at your cash flow out of you if you let it, so taking the bull by the horns and redirecting your business plan and operational demands within your business can have your debt ratio turning in a new direction. Controlling your wasted revenue and increasing sales can bring in money that you can use to mange your business debt. More From Seek
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