Starting up a new business is exciting, scary and liberating all at once. Throwing off the shackles of working for someone else and going it alone is a big deal and it takes a lot of research and a lot of preparation to be ready to start a business. The problem, is that lenders everywhere are really tightening their belts when it comes to business finance, so managing to get the funding to get the business idea of a lifetime off the ground is difficult. Companies are struggling to get the funding for everything from materials to health care insurance, and it’s a big reason why half of all new businesses fail in their first year. Money may make the world go around, but so many businesses aren’t going anywhere due to struggles with debt and trying to get their heads above water.
Bankruptcy is a popular option for small businesses that are failing, as it is an avenue that can save a company in the long run, but it comes at a hefty price. Read this article to learn about how much bankruptcy can cost a business, and not just financially. While bankruptcy is an option, it’s one that causes damage to both the business credit score and the credit score of the owner personally, so it should never be the first option that you use to dig yourself out of debt. Don’t worry though, you can avoid a similar result for your business. You don’t have to opt for bankruptcy as a way to salvage the company you have worked so hard to raise from the ground. We’ve got six ways you can steer your business away from the red seas of debt and back into the black.
Cut Costs & Free Your Cash
In a business, you can easily spot where it is that is putting you in debt. You can see exactly the areas that are pushing your business into the red, and attack those areas directly. If you have customers that aren’t paying you in a timely manner, your utilities and shipping costs are too high, or your business rent has slowly climbed over the time you have been there, you need to work out how to rectify these issues. Start ramping up collections efforts with customers and so a comparison on your utilities so that you are getting the best deal. Talk to your landlord about the rent and if there is no wiggle room on your rental amount, start looking around for cheaper premises. Sell your unwanted or unused office equipment for cash and scrap. There are a lot of ways you can cut costs in the office, you just have to find them.
Revisit Your Budget
When you find yourself in debt that is growing rather than reducing, it’s usually because the company budget is very much off. You have to look at the current financial situation of your business and build a new budget based on that. Previously, your budget has been all planning and guesswork, but you’re now in action and up and running, so you can now paint a more realistic picture of the budget you are working to. Pay off more than just the minimums on business credit card debts so that you aren’t adding more money in interest and charges through the year.
When you are looking at the debts your business has accumulated, you need to work out where you pay the highest interest and tackle those first. If you want to tackle them altogether, you should look into how you can get an application for a debt consolidation loan approved. You can read it at DebtConsolidationLoans.com so that you can really learn the best way for your application to get the green light and get you out of debt. Paying off business debt isn’t always easy, and if you’ve guaranteed any of your debts, you need to get those paid off quickly so that your creditors don’t come for your assets.
One of the best things that you can do to get your business back to black is to communicate with creditors. Believe it or not, the people that your business owes money to are not going to eat you! Talk about the hardship that your business is going through right now, and discuss the financial situation that you are in with great detail. Most of the time, your creditors will offer you a payment plan that you can stick to. If they don’t offer you one, then you can request one and you can even request a reduced amount to settle the debt entirely. You can negotiate so that you can settle the debt faster if they give you better terms to do so, but you don’t have to be demanding about it. The worst thing that you could do, though, is to get that coveted payment plan and then default, so stick to it.
It can be daunting to speak to and negotiate with creditors, so get the help of a credit counselling organization like these. They can liaise with you on the best course of action with your creditors for your business.
Professional debt management companies that work specifically with businesses can really help you to get the best deal on your debt repayments. They can negotiate with creditors on your behalf and sniff out any inefficiencies that could be keeping you up to your eyeballs in debt. Be careful though, as there are far too many debt management companies out there that scam businesses out of their money without helping them to pay off debts.
Getting your company out of debt isn’t always easy, but if you have a plan in place and you speak to the right people you can ensure that your company gets back its solvency without heading down the bankruptcy route. Take the chance with your company and help it to swim rather than sink – you won’t regret it.