Debt is integral to the smooth functioning of a small business. A business line of credit, loan, or credit card could go a long way in helping your organization while hiring new employees, buying equipment, and efficiently financing growth. However, you need to guard against the accumulation of overpowering debts. An ever-mounting debt could end up stifling your cash flow and jeopardizing your business operations.
As per https://www.huffingtonpost.in, we understand that small business owners including sole proprietors, independent contractors, and some others could apply for loans via Paycheck Protection Program of Small Business Administration and even via ‘Economic Injury Disaster Loan Program’ that are included in the recently announced $2 trillion COVID-19 pandemic stimulus package.
Debts are the need of the hour. However, very soon lenders would start to tighten the reins on small businesses who have borrowed money. At the same time, prices are escalating for practically everything right from health care to materials. Several small business owners are reeling under excessive debts. However, Robert Trosten has come up with some expert tricks for small businesses and even startups to get rid of overpowering debts.
Robert Trosten Tip: Reduce Unnecessary Expenses and Help in Freeing up Cash
You need to focus on detecting the specific parts or aspects of your business that brought the organization neck-deep into debt. Then you must tackle those issues individually. Suppose customers are failing to pay promptly or if your expenses are getting out of control. You may think of boosting up collection endeavors and eliminating all unnecessary costs like expensive phone systems, or office space, etc. Another effective way of freeing up some valuable cash is selling off unused machines or equipment. If you boost your overall sales, it would be getting adequate sales for tackling your debt. However, you could try the following three tips if your expenses are fast becoming too high.
· Consider selling off office supplies, equipment, and also other items that are not too much in use. Stick to leasing or purchasing used equipment if the need arises.
· Downsizing really helps. Shift to a relatively smaller low-cost office that promises lower utility expenses and definitely lower rent. You may start working from home giving up the costly office space.
· Try splitting expenses with other organizations. Identify others who are operating similar businesses and offer to share resources to effectively cut down the costs.
Robert Trosten Tip: Consider Revisiting the Budget
If you are encountering ever-mounting debt, it implies that the budget for your organization is simply not working out. Need to devote some time and effort to create a brand new budget based on the present financial state of your organization. You have to ensure that your revenues are covering all your fixed costs every month such as utility bills, rent, etc.
You may dedicate a part of your monthly budget to variable expenses like manufacturing raw materials. And most of the remaining money should be diverted towards payment of your debts. In the event you are having business credit card debt, get into the habit of paying far more than just the bare minimum. Otherwise, you would be in deep trouble as your debts would be piling up and you would be taking years for paying them off. A great way of helping you stay on track is by using Quicken or QuickBooks, Peachtree, ProfitCents, NetBooks, or MS Money. Seek assistance from cutting-edge software and tools.
Robert Trosten Tip: Businesses Must Boost Sales
Once you are following a precise debt management plan, consider boosting your overall sales. Let us explore some great ideas.
Consider rewarding loyal customers: You may come up with a good loyalty program. That could boost customer satisfaction and also result in an increase in retention. Studies revealed that around 82 percent of the individuals admitted that they would probably buy from a store. That comes up with enticing offers such as a great loyalty program.
Be more active on all your social media platforms: You must make it a habit to interact more actively and engage with your audience consistently. Consider posting regularly and commenting or liking posts promptly. Respond to messages promptly. Most people rely on online reviews and even trust personal recommendations.
Boost prices: With the perfect stratagem like you could come up with an interesting volume discount when bulk orders are placed. You could stay competitive thanks to volume discounts as per the Harvard Business Review.
Robert Trosten Tip: Give Top Priority to Debt Payments
You need to prioritize all your debts and start eliminating them one by one as per your convenience debt payment strategy. Consider dealing with debts that come with the highest interest rate first. That would imply focusing all your endeavors on paying down promptly your business credit cards. Moreover, if a supplier or creditor may compel you to give up your personal assets in the event you default on the payments, it is best to pay off those debts first and give them top priority.
Robert Trosten Tip: Negotiate With Creditors
You could consider discussing your financial crisis situation to your creditors. Explain to them how your business is passing through a difficult phase. Consider asking them if they are having a precise hardship plan so that you could enjoy better payment terms. If the creditor informs you that there is no such hardship plan. You could ask for a slightly reduced settlement amount or a better payment plan that could prove convenient to you as you would be able to make all the payments. Make it clear to your creditors without sounding rude or risking. Their wrath that you would be paying off your debts faster only if they cut down your debt. You must dedicate all your resources and energy to fulfilling the bargain.
Robert Trosten Tip: Debt Consolidation Is the Way to Go
Consolidating your individual loans into one single payment could help in reducing monthly expenses without ruining your credit. The best move would be to opt for debt consolidation by integrating multiple shorter-term debts into one single long-term package.
Businesses at times, face overwhelming debts. If you take the perfect amount of loans and that too, at the best times, you could enjoy and feel the difference between a struggling business and a successful one.