Tackle Business Debt
Many business owners can attest to the fact that business debt is a black cloud that ominously hangs over your company. Thankfully, you have the power to eliminate this debt through prudent planning and strategic action. You might even get your business out of debt sooner than you think.
Let’s take a quick look at possible steps to get your company out of debt:
Inspect the entirety of your business’s costs. Consider whether each of those costs is justified or whether they need to be pared back. Some costs can be reduced while others can be eliminated. It might even be possible to share the burden of costs with other businesses. Everything from internet services to employees can be shared between businesses. You can also cut costs by downsizing to a smaller workspace, reducing your rent, and lowering your utility costs. Review your current lease and location to determine if it might be more beneficial to operate out of a co-working space or even a home office. It might also make sense to lease equipment and/or buy used equipment instead of buying brand new equipment. There is a multitude of options when it comes to cutting costs.
Prioritize Your Debt Payments
Do your best to tackle the debt payments. Try to eliminate them as quickly as possible. Pay down your business debt, starting with lines of credit with egregiously high-interest rates. Keep in mind, if any of your company’s debt is personally guaranteed, it provides an opportunity for a supplier or creditor to pursue your personal assets in the event you default. This means it is in your interest to eliminate such guaranteed debts before other debts, even those with high-interest rates. Prioritizing your debts based on guarantees provided and interest rates charged is important.
Analyze Your Budget
If your company’s debt is continuously increasing, it is time to re-evaluate your budget. Your budget should be centered around your company’s financial situation at the current moment. Ideally, your expense to revenue ratio should not exceed 30%. Remaining funds can then be allocated to the repayment of debts, especially those such as business credit cards with high-interest rates or those with personal guarantees attached. Analysis of your budget will give you the ability to pay down your debts at an increased pace.
Contact Your Creditors
There is no shame in contacting creditors, discussing your company’s financial situation, and asking for better terms. This way, you can repay the money owed on time without being penalized by an absurdly high-interest rate or late fees. Clarify that you will repay the debt that much faster if the creditors reduce the debt amount or at least reduce the interest rate. The lender might even be willing to renegotiate the length of the repayment period. When all is said and done, contacting your creditors and making such alterations may prove mutually beneficial to both parties.
Consolidate Your Loans
The consolidation of loans into a single payment helps decrease monthly costs and simplifies the number of payments to be made every month. Ideally, loan consolidation will group multiple short-term loans into one lump sum loan that simplifies the debt and reduces your monthly debt obligation. The consolidation of your business loans is an option in eliminating company debts.
The Business Consulting Specialists are a Call Away!
Our business development and restructuring team is on your side. Reach out to us today to learn more about how we can help you get your business out of debt and ultimately help your company maximize its true potential. You can reach the Cerberus Consulting team by dialing 587-400-3858 or filling out our convenient online contact form.