Guest Blog Post by Barbara Delinsky of Oak View Law Group.
Finance is one of those things that’s always supposed to be a matter of concern if you own a small business. In fact, it takes a few years’ time for a small business to break even from the time of its inception. However, fact remains that businesses, just like individuals, can sometimes suffer from excessive debt. As an entrepreneur who’d like to keep his or her small business debt free, your foremost concern should be to get out of debt quickly. As per the statistics released by the United States Small Business Administration, approximately 50 % of small businesses are said to be unsuccessful barely within the first 5 years of their launch.
5 crucial tips to help your small business remain debt free
As a small business owner you should take few essential steps to avert extreme debt situations that can actually spell disaster for your entrepreneurial aspirations. Have a look at the following 5 tips and save your small business from the clutches of debt.
1. Cut costs as much as possible: The immediate step you’ve got to take should be in the direction of cutting costs to save your business from going down to the pits of debt. Begin by identifying areas where you can reduce costs. Try selling off unused equipment or sublease unused space, cutting off workforce isn’t always an attractive option.
2. Get in touch with your creditors: Don’t make the mistake of ignoring your creditors. Contact each of them and inform them about your predicament. Remember, if you ignore your creditors, then it can actually lead to the worsening of your debt situation. Request your creditors for a lower interest rate or you could ask for a restructuring of your payment options.
3. Carry out cash transactions: Since you’re looking to get out of debt quickly, hence it’s always advisable that you carry out cash transactions as far as possible. This is essentially because when you make purchases with a business credit card or credit line, then you might land up buying something you can’t really afford and then have to worry about paying for the expenses later. This leads to further debt which is definitely not wanted.
4. Stick to a budget plan: This can be an extremely effective way to reign in your business costs over a prolonged span of time. Formulate a budget plan for your small business and adhere to it religiously. Putting your budget plan in writing actually gives you a clear view of the amount of debt your small business has and how you can take care of it effectively.
5. Seek outside help: This is the final idea that you can follow if all other measures fail. Don’t just sit on your business debt without any reason. Go ahead and consult a debt consolidation company. They can help you create a debt payoff plan which can prove extremely effective too.
Don’t panic unnecessarily. Have faith and believe that your small business can get out of debt quickly provided you take some immediate action and follow the 5 tips discussed above.
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