Debt Doesn’t Have To Be Hard On Your Business – Read These Tips
Have you borrowed funds from the market and now it has landed you in a circle of debt? A statistic showed that close to $600 billion is borrowed by small business owners. So, if you are also one of them, let’s look at ways to fix it!
1. Do a proper cost-cutting exercise and free up ill-invested Cash!
If your business is ridden with debt, this is the first exercise, which you need to commit to as an entrepreneur. Usually, businesses spend on a lot of unnecessary requirements when the cash flow is strong. This leads to the creation of ill-managed assets.
Thus, when these investments do not pan out, it becomes difficult for the business to keep itself afloat and the debts start to pile up. So, in this case, cost-cutting is very important and a proper opportunity cost analysis has to be done in order to derive the conclusion.
You can also select your immediate liquid assets so that you can pay off the debts or get an extension from the creditors.
2. Work on the Budget and do a run down with available cash.
Ill-budgeting is the cause for a lot of organizations going out of business, and hence, realistic numbers are always appreciated and welcomed. When a business owner runs a business, it is usually out of passion and they make unrealistic forecasts.
Due to the same, it often becomes difficult to keep the business afloat with those investments. Hence, if there is faltering cash flow, the next few months have to be planned in accordance with that. The propensity of expansions has to reduce and more time should be devoted to revenue generation.
This could also be a wake-up call for businesses to pivot their business plan and work on alternate avenues for extra revenue generation and cash flow.
3. You will have to come up with a debt payment module.
Planning the payment of debt becomes important as this will only keep the business going, and you will certainly not want your reputation to go down the drain. So, what can be a way out to pay debts and ask for extensions? Have you heard about the Minimum Payment module?
This is really easy to execute but requires ardent participation and efforts. Prepare an excel sheet, where you will list down all your debts. Once you do that, all you have to do is just agree to a minimum amount, which you can pay to all your creditors and one lump sum amount to the highest unpaid creditor.
Once you figure this out, start paying the same in a way that once the highest unpaid creditor is fully paid and you can shift your focus to the next highest creditor.
4. Negotiate with Your Creditors and other lenders.
You can also negotiate with your creditors and come to a lump sum settlement for the money you owe them and ask for an extension for the debt. Although this can be very tricky, if you can convince them of a revised payment schedule, it will help you to make swift payments.
5. Work on a loan to repay the debt.
If there is no way out of the circle of debt, you can always consolidate all the debt into one and take a loan against the amount with other personal assets as security. With this, you can at least have a singular interest rate and you can set your own terms of engagement for the new loan.
This will also help you in buying time and keep you away from bankruptcy or other collection agencies howling your way like angry butchers asking for money all the time.
6. Have You tried an expert’s advice on getting things done?
If you think that you cannot manage any of these on your own and fending off those debt collection agencies will be really difficult, you will have to consult with a lawyer or an expert accountant.
They can not only give you a vivid perspective but also provide you with the right consultation. This will help you, in the long run, to save your reputation too, as debt collection LA can be very brutal.