Are you currently struggling with serious debt? As a business owner, this is the last place you want to be. The more in debt you are, the more you are at risk of losing your livelihood. There are a number of measures that you can take in order to downsize your debt and get back on a solid financial footing.
Make a Full Inventory of Your Debt
The first thing you should do in order to get your business out of debt is to take a full inventory of what you actually owe. This will give you a much clearer idea of the exact extent of your debt and how long it may take to finally pay it all off.
You can start by sorting all of your existing debts by interest rate and monthly payment. These two categories will include the payments that you owe on business loans, lines of credit, and business credit cards. The full inventory should also include all of your outstanding payments that are due to various vendors.
Doing so will help you decide which of your debts you should try to pay off first. Many experts recommend that you start with the debts that come with the highest rate of interest. The goal for a small business owner should be to pay off all of their existing debts within a period of 12 months.
Consider Making a Debt Settlement Arrangement
If you are in serious debt with no clear way out anytime soon, there is a measure that you can resort to. You can consider making a debt settlement plan. This involves hiring a service that will help you make new arrangements with your creditors.
These arrangements may include:
- Helping you to reduce the total amount of the principal balance that you owe
- Helping to negotiate a reduction in the number of your monthly payments
- Negotiating to convince your creditors to waive their interest fees
- Making a settlement of your debts for an amount that is less than the full total that you actually owe
While there are some pros and cons involved with debt settlement, it may be a quick and easy way for you to offset the majority of your debts. Keep in mind that debt settlement will not wipe them out altogether. It will simply make it easier for you to pay off what you owe in a more manageable fashion.
Once You Know What You Are Spending, Cut Down on Your Costs
Once you have a clear idea of how much money you actually owe, your next logical response should be to try to cut your spending down. The more you can cut corners without harming the function of your business, the sooner you can get out of debt. Trim away all of the fat and you will find yourself in a much more healthy state.
If you need to downsize to a smaller office, do it. This will also enable you to get rid of excess amounts of equipment that you don’t really need. Paying less rent for a smaller office will help you cut down on your overhead costs. The more money you are able to save, the more funds you can put forward toward getting out of debt.
Give Your Clients Shorter Terms for Payment
One of the most effective ways that you can raise cash quickly is to give your clients a shorter amount of time to pay what they owe you. For example, if you are used to giving people 90 days to pay, you may want to consider cutting this down to 60, or even 30, days. The sooner you get paid, the sooner you can pay what you owe.
The Time for You to Climb Out of Debt is Now
No condition is worse than being trapped in a cycle of crippling debt. As a business owner, you can’t afford to remain here. The time is now for you to take all of the steps that will lead you out of this perilous position. The sooner you do so, the sooner you can back to enjoying a productive and profitable career in business.