Get Your Business Out Of Debt
I was extremely frugal when I started my blogging business.
Wherever possible I opted for free over paid blogging tools (e.g. Mailchimp, Canva, Sumo).
I earned a little bit of cash monthly from my networking business and that covered my initial monthly fees at Wealthy Affiliate (where I got almost the tools and training I needed to start my blogs).
When that income source dried up, my husband kindly paid for a year at WA on their Annual Black Friday Special. His only proviso was that my blogs must pay for themselves within a year. Thankfully, I managed to build my income just in the nick in the time.
So, fortunately, I have no business debt (unless my husband ever asks for his $299 back). He he.
I was happy to see this tip included (Tip 4: Borrowing from Loved One’s) in the excellent contributed post below.
5 Tips To Get Your Business Out Of Debt
Every so often, businesses need to borrow money to get things done.
Perhaps they need to order new stock, cover general expenses, or something else, but whatever the reason, debt is incredibly common, even for some of the most successful businesses.
Unfortunately, as everyone knows, while debt can be incredibly helpful, it can also be incredibly dangerous. It’s easy to borrow a little too much, and by the time you realise what you’ve done, you don’t have the cash available to make payments, and the debt spirals.
When this happens, it can be difficult to see a way out, but there are some things that you can do to help your business.
Here are some tips for you to follow.
1. Chase Up Customers
Some businesses get paid as soon as their customers are provided with their goods or service, but others have to wait a while before seeing any money. If your business is the latter, and you have to submit an invoice and wait a while before getting paid, then it might be time to start calling up customers.
Of course, not all of them are going to want to pay you early, but a few may be feeling generous and will sympathise with your situation.
2. Sell Off Assets
As a small business, you are unlikely to have many assets to sell, but I’m sure that there are at least a couple of things that you can get some cash from.
This could be anything from inventory, to computer equipment, to vehicles, or even a building.
Just be sure that you don’t need what you’re selling, and that you are benefiting more from selling them than you are from keeping them.
3. Raise Extra Cash
To pay off debt, you need some more money, and if the options above don’t work, then there are other ways that your business can raise some extra cash.
A limited-time sale, for example, can bring in a lot of customers, all of whom will be providing you with cash.
Of course, if you are going to do this, you need to be sure that you’re earning more money than you’re losing because giving things away isn’t going to help.
4. Borrow From Loved Ones
Borrowing money to pay off debts is usually not a very good idea, but a loan from a loved one could be an exception.
You often don’t have to pay interest, which is perfect if you’re currently paying a huge sum, and you usually aren’t hassled every five minutes for payments.
However, this could put a strain on your relationship, so make sure to think it through properly, and do everything professionally by writing out a contract.
5. Debt Consolidation
If you have several smaller debts, all of which are high in interest, then it makes a lot of sense to consider consolidating your debt, using a company like Debtconsolidation.co.
Although you’re technically not paying off your debt with this method, you should end up paying a lot less interest, so you will be able to pay off your debt a lot quicker and easier than you would have before.
Debt can put a huge strain on your business, so if you can’t find a way out of it yourself, it’s always sensible to speak to a financial advisor.
Do you have any debt in your small business? What measures have you had to take to avoid or get out of debt?