When you review your company’s finances what do you see? Are you happy with your current level of income and expenses, or do you see a few glaring issues? Are you concerned about business debt, and hope to find a way to improve your situation in the months to come?
If you have too much business debt and neglect to do something about it now, it could come back to harm you in the near future. Rather than take this risk, there are several steps that can put you on the right track.
1. Revisit your Business Budget
If you can’t remember the last time you reviewed your budget, there’s a good chance now’s the right time to dive in.
The budget you relied on two years ago won’t produce the same results today. And of course, the budget you create today won’t lead you down the right path next year.
Revisit your business budget with an eye toward your income and expenses. More specifically, pay attention to the expenses that continue to dig you deeper into debt.
2. Reduce Expenses
This is easy enough, right? If you have too much debt and continue to add to it, the best thing you can do is reduce your expenses.
Here’s a breakdown of 12 major business expenses, along with tips on how to reduce them. Even if you only make some progress, you’ll soon find your debt load decreasing.
3. Use a Balance Transfer Credit Card
Let’s face it: many business owners rely on credit cards as a means of getting ahead. While this works for the time being, it can also cause more financial harm than good in the long run.
If you have debt spread across several credit cards, you have two options:
- Pay down each one individually
- Combine the debt
With a balance transfer credit card, you can bring all your debt under the same roof. This helps in many ways, including:
- One account instead of many, thus allowing for better management
- Lower interest rate
- Save money on monthly finance charges
There are a variety of balance transfer credit cards designed specifically for business owners, so learn more about each offer before making a final decision.
4. Negotiate with Creditors
There may come a point when you realize you just don’t have the ability to repay your debt. Every month things get worse, and you’re afraid of what may happen if you don’t take action.
This is a major concern that deserves your immediate attention. Since you don’t have the money to make things right, the next best step is to negotiate with your creditors. Here’s how to get started:
- Contact the creditor to inform them of your situation
- Ask around until you get a decision maker on the phone
- Discuss your ability to pay less than what you owe
- Determine if the creditor is interested in some type of debt settlement
- Make an offer, and if accepted, pay immediately to settle your debt
Some creditors will agree to this idea, as they’d rather receive something than nothing at all. Others will fight back, assuming they can eventually get everything that’s owed to them.
There’s no way of knowing what will happen, but it never hurts to try to negotiate.
Final Thoughts
With the average U.S. small business owner carrying nearly $200,000 in debt, it never hurts to see how you stack up. Maybe you’ll find that you don’t have nearly as much debt. Or maybe you’ll learn that you have more, meaning that it’s time for a change.
Here’s the good thing: if you’re seeking to reduce business debt for a better future, there are plenty of strategies for doing so. You simply need to find and implement the right one!
