Business Debt Reduction Strategies For Small Business Owners

Small Business Debt Reduction Strategies Do It Yourself

Many business owners have no other
choice but to put some debts around their necks. Money is the life of a
business. In fact, there are quite a handful business models that require
taking on debt to capitalize on growth opportunities. Thus, If you’re an
entrepreneur and you have debt, you’re not alone.
Still talking about debts, In a poll
conducted, 36 percent of small business owners said they were uncomfortable
with how much debt their businesses carried. Forty-nine percent said they find
it extremely difficult to manage their current debt. Truthfully, looming debt
can squeeze the joy out of being an entrepreneur.
In this article, let us look at some
strategies an entrepreneur can use to reduce his or her small business debt.
Achieving this will push the entrepreneur to a positive path, and influence him
or her to focus more on moving the business to greater heights.
Here they are:
· ENSURE
YOU MAP OUT YOUR SMALL BUSINESS DEBT
First things first. If one is faced
with a task, one need to first assess how big the task is and what tools one
have at disposal before one can devise a plan to beat it. The same applies when
you’re dealing with debt.
Ignoring debt won’t make it go away.
And in some cases, what feels like overwhelming debt is just disorganized
income, or income you haven’t optimized towards paying off debt. It is always
important to have A CLEAR PICTURE of what one is dealing with.
Spend some time to identify your
total debt. Create a monthly budget, and determine how much cash you can
allocate to paying off your debt. One can recalibrate one’s cash flow and
identify ways to put more money toward killing one’s business loans.
There are important measures a
business owner should endeavor to summon up in this period. Creating an
essentials-only spending plan that sets up some voluntary austerities until
one’s debt reaches a goal point, will have a positive effect. Also, by
setting specific income goals that are wholly dedicated to paying off debt, one
will do well for oneself in the attempt of reducing one’s debts.
These strategies, when approached
diligently, can be used for paying down all types of small business debt. But
they’ll only be effective if one have one’s company finances dialed in. If your
cash flow as an entrepreneur is highly variable, or if you are unable to stick
to a budget, you may end up generating more debt by the end of the month.
· IT
IS EXPEDIENT TO RE-STRUCTURE YOUR DEBT:
After doing the first thing first,
you now have a clear picture of the debt you owe. Now that you have a clear
overview of the debt you owe, it’s time to look for ways to restructure the
debt and, if possible, reduce how much you owe.
The attempt to restructure our debt
will lead us into subsequent points
· IDENTIFYING
LOOPHOLES
Please get this into your head: YOU
MUST ALWAYS BE AWARE OF THE TERMS OF YOUR LOANS. Being aware of the terms of
your loans will help you to pay them down more effectively. Giving an example
for this let me give the exact quote of a finance expert:
“For example, if you pay extra
on a monthly loan repayment, will that surplus be credited toward future
repayments or just deducted from the capital, leaving you on the hook for the
full payment next month? This can determine how you apply a temporary cash
surplus to killing each of your loans. Loopholes usually only apply to
installment loans and payments to vendors. Credit cards and lines of credit
don’t have structures that make this advantageous.”
· THINK
‘NEGOTIATE’
Be ready to negotiate terms with
vendors. Can you extend payment terms on any outstanding invoices?
Renegotiate the terms of your loans.
This applies both to the initial loan and your relationship with the loan over
time. Sending loans to collections represents a huge loss for lenders, which
means there’s a chance your lender will be flexible and accommodating about
such things as late fees, restructuring payments, and even renegotiating
interest. A hardship letter may also help to support your negotiation efforts
with creditors. Paying the debt on time is, and will always be the best policy.
Nevertheless, don’t be afraid to approach your lenders and negotiate the terms
of your loan. Just be aware that renegotiating the terms of a loan is likely to
affect your credit score (so apply this tactic if you’re not planning to apply
for another one too soon)
· PUT
YOUR PAYMENT ON AUTOMATIC MODE
Each time you receive a payment,
immediately forward a percentage of the revenue to your lender. If you can, set
up an automatic transfer from your bank account so you don’t feel tempted to
keep the money in your account. This is one of the most recommended credit card debt reduction strategies.
Debt consolidation is where you take
out one large loan (preferably a low-interest loan) to pay off several smaller
business loans. Watch out though, many of these require collateral or personal
guarantees that might add up to uncomfortable risk.
· TRY INCREASING YOUR INCOME:
Having identified and minimized your
debt and gotten a repayment plan in place, it’s time to kill the debt you owe
using cash you have on hand. See, if you are an entrepreneur and the thoughts
of being in debt is bringing you down, am telling you that you don’t need to
allow debt dampen your entrepreneurial spirit. The more cash you can generate,
the quicker you’ll be able to reduce your small business debt and pay down
those ugly loans.
If you want to be increasing your
business’ monthly income, you can diversify. Strive adding an additional
product or service to what you currently offers. If you can, you can diversify
your approach to untapped niche audiences.
You can also raise your price. As
far as you can maintain the same amount of sales, charging more for your
products or services is a quick way to increase your income. Nevertheless,
before you raise prices, tell your existing customers that prices are going up
soon and ask them if they’d like to order anything before the change is in
effect. That could also result in a bump in revenue!!!!
· SELL
YOUR SURPLUS:
Why not liquidate your assets? Look
at the things you don’t use (or don’t use to full advantage) and sell them to
people who really need them. Just ensure you don’t sell anything you’ve put up
for collateral on existing debt. If you do that, you are committing a fraud,
and it has serious legal implications. This is one of the most effective personal debt reduction strategies.
· THINK
BROAD:
What else can you do to make quick
financial gain? Can you lease out a portion of your office to another business?
Could you save on rent by working remotely? Can you take up a job at your spare
time? THINK! THINK! THINK!
Note. There’s nothing wrong if the
thoughts of you being in debt makes you feel unease. It will only go wrong if
you let it stop you from taking the necessary steps to reduce your small
business debt as soon as you can.

More Business Opportunities:

It's only fair to share...Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedIn
Join 80,000+ Other Members To Access Small Scale Business Ideas and Business Plan Samples. Get Information on Franchise Startup Cost, Price and Fee. Start a Business Today!

How Much Does it Cost to Start? Find out!

Enter your email address:

Leave a Reply

Your email address will not be published. Required fields are marked *

five × one =

PracticalBusinessIdeas.com © 2011 - 2017 | All Rights Reserved.
error: Content is protected !!