When you’re an entrepreneur, you need to know how to manage business debt. When I work with business clients, one of the first things I advise them is to start out on a shoestring. If you don’t truly need to rend office space when you’re a start up, then don’t. Anywhere you can cut costs without impacting the quality of the goods and services you require, the better it will be for your bottom line
If you find yourself struggling with business debt, here are a few solutions to get yourself out.
- Inventory your debt. Look at total debt, interest rates, repayment terms of all the money you owe. If it’s for a product you purchased — a computer, for example — make note of that. If it’s credit card debt or a revolving line of credit, note that as well. You need to know where and how you’re spending your business’s money before you can put a plan in place to reduce debt.
- Grow your sales to address debt. Reward long-term customers with discount prices if they “renew now!” Incentivize customers to stay with you and get a quick boost of cash to help your bottom line.
- Cut costs where you can. Again, if you don’t need an office or don’t need an office as large as the one you have, downsize. If you aren’t seeing results from various advertising, stop paying for it. If you have signed up for online groups or courses or classes that you simply don’t use, cancel the subscriptions.
- Talk with your business banker and ask about consolidating high costs debt and refinancing to obtain lower interest rates and better terms.
- Shorten the payment terms with your clients. Rather than having clients on a “net 45” switch to a “net 30” or “due upon receipt” as a way to infuse your cash flow.
Don’t let your business debt crush your spirit or your efforts to grow. Simply take a step back, take an inventory and move forward with more fiscal responsiblity.