Liquidating debt will lower costs
Forty-nine percent said they find it extremely difficult to manage their current debt.While you might have to take on debt at times to scale your business, looming debt can squeeze the joy out of being an entrepreneur.Credit cards and lines of credit don’t have structures that make this advantageous.Can you extend payment terms on any outstanding invoices?Plotting the end date, plus a few other “debt repayment goals” in your calendar, will keep you motivated and help you measure how well you’re doing with your loan repayments.Here’s what a simple debt repayment timeline would look like if you paid off ,500 in debt over the course of three years.If restructuring your small business debt is too much to deal with on your own, consider working with a debt restructuring firm. Becoming a pro at reducing your spending starts with having a razor sharp understanding of how much you’re currently spending. Every time you receive a payment, immediately forward a percentage of the revenue to your lender.For a fee, they will negotiate with collection agencies and creditors on your behalf in order to extend or change your existing credit agreements. Find ways to spend less and you’ll have more cash to reduce small business debt. If you don’t have the time (or willpower) to do this manually every time you get paid, set up an automatic transfer from your bank account so you don’t feel tempted to keep the money in your account.
If you’ve fallen behind on your payments, don’t be afraid to pick up the phone and negotiate the terms of your loan.These strategies can be used for paying down all types of small business debt, but they’ll only be effective if you have your small business finances dialed in (that’s where the budget comes in handy).With your budget and debt reduction strategy in place, you should be able to calculate when you’ll have paid off all of your debts (provided you stick to the plan, of course).To make sure you get the most out of this method, it’s best to seek the advice of your accountant or a financial advisor before consolidating debt.The key is to make sure this method doesn’t just free up maxed out lines of credit and get you in an even bigger hole. Do you know the cost of your raw materials, supplies, labor, office supplies, rent, car lease, transport, marketing, and everything else you spend money on to run your business?