If your small business has fallen into some financial peril, it might be time to regroup. Maybe you haven’t managed your credit effectively. Or, have you been overusing your business funds for personal things?
Something has to be done, but relax. There are options available, and your calm but proactive response will help turn things around before you know it.
So here are some tips to reduce your business debt.
Check the budget
This is the very first place you should go. Identify everything that comes in, and everything that goes out. Subtract the outgo from the income. Where are you sitting?
Examine the outgo items closely. Can funds from any of these items be redirected to the more important ones?
Ideally, if you have an accountant, he or she should be making you aware of these things. But maybe it’s just that you haven’t taken them seriously.
If you have been handling the accounting yourself, then consider getting some help. However, if you’re good with a computer, consider getting some accounting software.
Finally, if you don’t have a visible budget, start creating one immediately.
Now that you have examined and reexamined your budget, it’s now getting close to the time to take action. It boils down to your business priorities.
Subscriptions and memberships can be helpful, but only if you’re using them. If you’re not using these things, cancel them. That money can go to better use in your budget.
Don’t even think about buying a work truck in this situation. Consider leasing one. Check out leasing companies like FlexFleetRental.com or other similar services and see if they can help you save some money.
The point here is to look for expenses that are not important enough to allow your business to go into financial ruin.
Make more money
Maybe you were hoping we’d say this! It’s true, though. Cutting costs is a big part of the picture, but you also have to keep working to bring in revenue.
Find a way to increase your sales. Collaborate with your staff to get ideas. Maybe you could mark some items down, or charge a bit less for your services and sell more jobs.
Caution: Don’t decrease your fees too much. You could actually put yourself in a worse position by losing money.
One word on accounts receivables. Don’t be too relaxed when it comes to getting your customers paying their bills. Get you’re A/R staff on the case and have them step up collection efforts. Be firm and tactful, but get it done.
Talk to your creditors
Maybe your situation is such that you’re falling behind in your monthly obligations. Just as you would with your personal accounts, get in contact with your business creditors. Explain the situation to them without giving them too much detail. Just keep the lines of communication open, assuring them that you have a plan to turn things around.
Sometimes despite your genuine, diligent efforts could fall short. At this point, you need some help, which you can get from a firm that specializes in debt-restructuring.
They will negotiate with your creditors, including your payments. You can be sure they will set up automatic withdrawals from your account to make sure the agreement is honored.
The alternative to this is an even more expensive bankruptcy. Think about it.
Okay, so things got out of hand. But don’t let your dream disappear. Just take responsibility, get proactive, and if necessary accept any help available.
If you put any of these tips to use, you should be able to curb your business debt in no time.