Debt Reduction Tips for Business Owners
Owning your own business often comes with a lot of stress, whether from staffing concerns or making sure inventory meets the needs of clients or managing
overhead costs and debt. Businesses that have a lot of debt tend to struggle even during times when sales are high, so the best option is to look at ways
to reduce debt and put more money back into the company instead of constantly falling behind.
Cut Costs
This is a pretty simple solution to a debt problem, but it really is the best place to start. You may want to bring in an outside analyst who can provide
more information about places that your business may be spending excess money without you even realizing it. If you have customers who are slow to pay
invoices, you can start there and implement a 30-day window before you start charging interest. You can also look into options to lessen overhead costs,
such as downsizing your office space or selling equipment that you dont use.
Consolidate Debt
Similar to an individual who is struggling with debt, one way to make it feel more manageable is to consolidate, so you only have a single payment. Credit card debt tends to
have higher interest rates, so look at ways you can lower the rates by transferring that debt. You can also set up payment plans. Some creditors will even
reduce your debt amount if you can pay a lower amount up front. However, if you feel like the business still wont be able to pay the monthly amount or pay
off the debt, dont set up a repayment plan.
Debt Management
If your organization is struggling to stay above water with the amount of debt accrued, it may be time to involve an expert. Debt
management companies offer services to business owners where they will work directly with creditors and establish plans that work for all parties. Be
cautious of scammers who may try to offer you debt management services. Stick with companies that have accreditations with the U.S. Organization for
Bankruptcy Alternatives to make sure they are legitimate.
Analyze the Budget
Image via Flickr by Ken Teegardin
If you continue to struggle with debt, you can also analyze your companys budget. Start with the costs that come each month, such as payroll, utility
bills, and office space rent, then deduct the variable costs that tend to change. Once you have budgeted out the necessities, use any remaining funds to
pay down debt and eliminate portions as quickly as possible to lessen the amount of interest. In some cases, bad credit business loans can be helpful for companies that have fallen on hard
times and need to lower the interest rates on their debt.
Debt can feel like a weight on your shoulders that never seems to go away. When you start to create a plan for paying off and eliminating the business
debt, you will probably notice that your stress is lessened and you can have a more fulfilling career.
