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Being in debt can be one of the most difficult times as a business owner and it can have huge impacts. If you find that your business’s debt is becoming unmanageable, you need to take action as quickly as possible. Company Rescue Specialists, Forbes Burton have put together top tips for getting your business out of debt.
Know Which Debt to Pay First
It is important to prioritise which debts you are going to pay off first, the critical ones should be your first priority so the debt doesn’t get worse and potentially destroy your business. Things to consider are interest rates, penalties and whether you could be damaging relationships with vendors. All debts need to be paid off, but it is good to weigh them up to determine which one to pay off first.
Increase Your Revenue
In order to have more money, you need to raise your revenue, this might sound difficult, but there are simple ways you can do this. Creating promotions and discounts can be one of the best ways to generate more interest from your customers, it is important to make sure you have a good balance when creating discounts, so you do not lose more money. Another way to increase your revenue is by looking at your margins, if you have low margins, you might be able to increase them. Make sure the value of the product or service is clear, then you are more likely to have customers who pay the increased prices.
Look at Expenses
Most businesses nowadays rely a lot on tools and software to help them with their businesses, but ask yourself, do you pay subscriptions that you rarely use? If the answer is yes, then it is a good idea to cut ties with these software. If there are certain tools that you cannot part ways with, then maybe you could negotiate the price with the vendor, or go on a smaller package. It sounds simple, but doing little things like this can help massively in reducing your expenses.
Create a Plan
This sounds like an obvious tip, but a lot of businesses don’t do it. Creating and sticking to a plan can be the easiest and most efficient way to handle your debt and your financial situation moving forward. To begin, make a list of your minimum monthly payments and make sure they are covered. Next, look at your highest interest debt balance and work out how much above the minimum you can pay each month. Even when you have all your debts paid off, it is important to make sure you have your finances documented to prevent anything from happening in the future.
Hopefully, the top tips above will be of help if your business ends up in a negative financial situation. There are many businesses that specialise in company recovery, so make sure you reach out for help.