In debt? For most, that’s the last place you want your business to be, but it can happen to anyone. When you find your small business in unmanageable debt, it’s essential to not panic too fast and start looking for a solution. Bad management of your debts can lead to you owing more and getting yourself into an even bigger pickle. Here are some tips for getting control of your business’s debt:
Start Early and Get Organized
Once you notice a pattern of making less of a profit and owing more payments than what your business is making, it’s time to start reevaluating. Begin by organizing your debt into separate, and descriptive categories. For example, business car X’s financing or store A’s mortgage. When you have each debt categorized, look at the payoff amount, the amount of minimum payment, due date, and the current maturity date. Staying organized is the best way to identify debt from most to least serious as well as making sure each payment is made on time and in the right amount to avoid any fees.
Find Ways to Boost Sales
If your business is falling behind, it’s imperative to not continue business as usual. Instead, find creative ways to boost your sales and make more of a profit. Reward loyal customers with a loyalty program, which can increase customer satisfaction and retention. You can also use social media to your advantage through marketing and connecting with customers. Most importantly, consider strategically raising your prices by offering a volume discount on large orders. This can help your business stay competitive without losing customers. However, the most important way to increase sales is to offer your customers POS Financing, or point-of-sale financing. For a very minimal cost, a business can offer its own customers financing for almost any item or service costing $1,000 up to $100,000. Takes just 48 hours to implement. 77% of customers nationwide* say POS Financing does and would affect where and whom they did business with. Also, the average business across the US who installs POS Financing, experiences a 20% overall revenue increase*.
Cut Your Expenses
Whether you’re breaking even or not, it’s imperative to cut costs where you can. Make a profit anywhere you can because debt can easily take you by surprise at any moment. Identify the total of all your expenses and then find the excess expenditures you can do without. More likely than not, there are going to be services and operations that are not absolutely necessary. Assess what your business cannot do without regarding the daily operations and cut the rest from there.
Restructure, Renegotiate, Refinance or Consolidate
When a business is drowning in debt with no lifejacket in sight, it’s time to ask a professional for help. This is no place for a do-it-yourselfer, either. Your finance companies, and banks, have their own lawyers representing them. You need professional help, too. The most viable approach is to use a reputable debt restructuring service with no upfront fees, that have attorney-led teams to work on your behalf. Typically, when you do, you can experience a 40% – 60% reduction in debt payments and to have the term stretched out much longer, too. Also, you should expect to not have any daily repayments, after your debt has been restructured.
* Source: Blue Ocean Credit Union & LendIt