Too much debt is what too many of us as small business owners know about right?
Yes, debt can be a killer when it comes to trying to be successful, in this difficult pandemic era that we live in. Making smart choices and being knowledgeable about making money, saving money, investing money and not getting into too much debt, are important issues of interest that should be noticed much more than they are by many small business owners.
Throughout this article we want to discuss with you all some helpful information that could potentially help prevent you from getting into too much debt early on in your business life. Many people who are just coming into a start up business too often make the same mistake, they rush right into too many different things that they can not afford to pay for, so they finance or charge it all!
Doing this is what starts this terrible and sometimes painful cycle that is not going to do anything except cause you stress and struggle all throughout your business life, eventually resulting in possible bankruptcy and business failure. Knowing and understanding just how serious of a problem this can be is very important and finding out this kind of stuff early on in business can really be very helpful and can save you a great deal of heartache and debt later on in your business’s lifespan. When you are constantly working on paying off of your debt that you have collected over the years, it will be hard for you to begin making profits within your business.
Debt can destroy any person’s business and life. No matter how much money you have or do not have, please be aware that without even realizing it, debt can begin piling up, and start eating your business alive. It is not something that many of us ever plan on having to deal with but unfortunately throughout your business; but some things do tend to happen that we just simply can not control. Oftentimes that unfortunate incident can cost you a substantial amount of money, money that you or nobody else can ever really afford, putting your business in debt unexpectedly.
It is so very important for everyone to understand early on in starting your business, just how difficult your opportunities may become because of uncontrollably rising debt each month. This is why you should always be aware of the fact that it can indeed happen to you. Just as with any other business, if you are aware of all the risks surrounding your business then you should most definitely be more prepared in knowing just what to do to stay away from debt that may occur at any unexpected moment throughout the duration of your business.
Do not let debt be your controller, you control all of your actions and try and be as responsible as ever, whenever it comes to knowing much and what you decide to spend your cash on.
Here are seven steps that can help your business become debt free:
1. Take inventory of your debt
Make a list of every debt your small business has, including loans, lines of credit, credit cards, and outstanding vendor payments. Also, notate each liability’s interest rate and monthly payment. Then, decide which one you’ll work toward paying off first.
2. Consider refinancing
Review your loan agreements and terms of service, then ask yourself if you’re in the same financial situation as when you first signed the documents.
If you buy materials on credit and have a long-term relationship with your suppliers, ask them for a better price and better payment terms.
4. Consolidate your loans
If you have multiple loans, try consolidating them so that you only have a single payment every month.
5. Cut costs
Cutting costs can help you free up some cash to put toward your debts. Review your expenses to see where you can cut back.
6. Review your budget
You probably wrote your initial budget based on your goals and projections, not your actual numbers.
7. Shorten your payment terms
If customers buy from you on credit, review your own payment terms.