Everyone has to deal with debt at some point in their life. Whether it be due to the need for loans to make large purchases or bad debt built from getting behind on interest-bearing accounts. Business debt like personal debt is not unusual; it is relatively expected, especially if your business is in the start-up stage. However, with some businesses, debt has become overwhelming due to money mismanagement. Here are six ways you can minimize and even eliminate debt for your small business.
Assess and Rework Your Budget
Setting an initial budget should be a part of your business plan from the beginning. It is also a changing part of your business that needs routine assessment and reworking when needed and every year. It is best if you hire an accountant or bookkeeper or use accounting bookkeeping software. The main focus is to get a budget and stick to it. Many small business owners have not done one, to their loss or even full failure.
Reduce Expenses
Once the budget is complete, take a look at all your expenditures. If done accurately, your budget will reveal where their expenditures are and are not essential to the business. Once you have assessed your expenses, pick a few to cut from your budget. Even one unneeded expense can add up to huge savings at the end of the year.
Temporarily Pay with Cash
The primary source of business is debt, loans, or other credit lines, which are sometimes unavoidable. Some even use credit cards to try to pay for the needs of the company. For some time of your choosing, only to pay with money, you know you have. Don’t take out more loans to pay a debt. It is easy to lose control if you have too many loans to pay back.
Communicate with Creditors and Lenders
Most business owners don’t realize that lenders and creditors will often work with you through hardships. Even if you make a lower payment arrangement, they are getting paid. Most lenders would prefer to work out a payment reduction than send it to a debt collector because they only get pennies on the dollar of what the debt is. Creditors also have an interest in you paying something rather than defaulting. Communication is key.
Consolidate and Stack
There are ways you can consolidate your debt, making it one monthly payment instead of one. Generally, you will have to go through a third party willing to take on all your debt and receive one payment. The other method you should incorporate is the stack method. This method entails you paying down from highest to lowest. This saves on interest, and the surplus created can go towards the next debt on your list.
Hire a Debt-Restructuring Firm
If you cannot take care of debt independently, hiring a debt-restructuring firm is a great choice. They specialize in not only restructuring debt but help you explore every possible way to repay your debt quickly. These firms also have the contacts to consolidate your debt, making it manageable with only one payment. While hiring a debt-restructuring firm will incur some cost, it is far less expensive to pay them to get your business on track and out of debt than to continue compounding your financial issues with high-interest rates and the piling on of other debt.
Conclusion
If all else fails, you still have options. For businesses that can’t manage their debt, it might be time to think about selling the business, liquidating all assets, or filing for bankruptcy. But before taking those extreme measures, first try reworking your budget, reducing your budget, temporarily paying with cash, communicating with creditors and lenders, consolidating and stacking, and hiring a debt-restructuring firm. One or more of these can turn your business around.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
