No matter what type of business you’re in, the effective management of your finances is going to come into play. Skillfully managing your business finances is very often the catalyst that drives success in the increasingly complex world of business.
Many entrepreneurs prefer to focus on developing their unique niche, but someone has to do a great job of balancing the books. This is especially true when the company needs to go into debt to grow and expand. You may need to go into debt to start your company — most small business owners do. Maybe you need to take on some additional debt to expand your operations. Either way, small business debt management is an essential skill. How debt repayment is handled can make or break any entrepreneurial effort.
Let’s say you’ve taken on debt to the point that whoever takes care of the accounting has begun to send out some warning signals. While you’ve been busy managing day-to-day operations, the combination of site rental costs, payroll, utilities, and bank repayments is beginning to cause discomfort. Now what? Here are some debt management pointers you might wish to consider.
1. Consult a seasoned debt management professional.
Seeking help is a must for anyone with unanswered questions about how they should pay off small business debt. As things get tight, you want to have someone who’s both confident and experienced at the helm to keep operations running smoothly.
Many business owners will start out by looking for a qualified CPA in their area, and that’s one valid approach. Another that many don’t take into account is consulting a legal firm like WH Law that can offer expert advice in many areas, including small business debt management, bankruptcy, and asset protection. Where a CPA can help you zero in on accounting — a good thing, for sure — legal firms often have a CPA on staff, too. The advantage of starting off with a law office is that your business will have access to a wider range of qualified skill sets.
2. Speak frankly with your friends and family.
Dealing with small business debt alone can be an incredibly demoralizing process. On top of that, speaking openly about one’s financial burdens can lead to feelings of embarrassment.
It doesn’t have to be that way. Talking with people who can be trusted will help you put the problem into perspective. This will be especially true if you are fortunate enough to have access to someone who has previously struggled with small business debt and come out the other side. Oftentimes a fresh perspective is just what’s needed to come up with a new plan of attack. It’s a lot easier to take on a financial challenge when you have others offering wisdom, support, and encouragement.
3. Make sure you gather up all the relevant information.
Spending time collecting all of your vital information will prove crucial to developing a plan of action. This process will make things much more efficient should you decide to enlist the advice of external professionals or apply for debt relief. Start off by working out the full extent of how much you owe.
The data-collection process includes accounting for credit cards, overdrafts, loans, interest rates, and utility bills. If you sell a product, include the cost of labor, transportation, and the price of the material itself. By doing this exercise, you might even start to craft your very own debt management plan. Start by prioritizing repayments in order of urgency.
4. Consult your bank for business debt management strategies.
After you have assembled all of the details relevant to your financial situation, contact your lending institution for advice. See if they can offer any debt repayment schemes or business debt refinancing options. More often than not, lending institutions are eager to help. The primary issue here might be overcoming reluctance to admit that you might have made a borrowing error. Swallow hard, then go ahead and make the call or send the email.
5. Look for ways to engage in cost-effective marketing.
Without new customers, there’s considerably less chance you will be able to increase revenue. You might find it helpful to step up your marketing to help pay off debt. This is where a cost-effective marketing campaign might be able to come to the rescue.
By utilizing social media or starting a blog, and working on SEO, you can begin to boost your brand’s visibility. Attracting new customers can very often provide the key to more income. Taking steps to boost your business’ presence is a solid first step.
6. Seek out local support for small business debt management.
In some cases, a range of financial support is offered to local businesses. It might be worth spending some time searching for any opportunities in your area. It’s a given that other entrepreneurs in your community have had to deal with small business debt management. Contact your local Chamber of Commerce for starters. Reach out to other community business organizations.
7. Don’t panic.
It’s important to remember that not all debt is “bad” debt. Many businesses take years to get firmly established and start thriving in the local community. Patience is often your best friend. In this regard, it can be essential to remind yourself that panicking very rarely gets anything of value done.