Financial difficulties can be a trying time for any business. If you find your small business in debt, it is vital to alleviate the situation as soon as possible. While some level of debt is typical in most companies, you should never have more debt than you can handle.
Fortunately, there are plenty of ways that you can find your way out of debt. Read on to discover some of the best ways you can manage and mitigate your small business’s debt.
Take Inventory Of Your Debts
Make a comprehensive list of your business debts, how much you owe, who is owed and what repayments and interest rates apply. Consider paying down the highest interest debts first. Work your way through the list until your debt is at a manageable level.
Cut Down On Unnecessary Expenses
Itemize every expense your business incurs. Order them by priority and aim to cut back on the lowest priority expenses. Renegotiate services like gas, electricity, and internet for your office space.
Consider Increasing Your Prices
A slight increase in pricing can have a significant impact on your bottom line. Consider increasing prices by 1%. Avoid increasing by too much as this may drive your customers to cheaper competitors. Offer bulk buy discounts to encourage larger purchases.
Look Into Refinancing Your Debt
Talk to your bank about getting a low-interest loan to consolidate your debts into. Having all your debts in one place can make it simpler to pay back. Negotiate for the best deals and keep track of interest rates to find the right time to refinance.
Some types of bankruptcy allow you to restructure your business, making your debt manageable and letting you operate despite your financial difficulties; for example, the provisions of Chapter 11 in Texas. Talk to a trustworthy law firm like Farmer Law PC to discover how bankruptcy could help your small business out of debt.
Talk To Your Creditors
Work through your list of debts and get in touch with each creditor. Discuss your payment terms and find out if they’re willing to make adjustments to help you pay off your debt. Do not ignore your creditors, as this will make relations worse and make it harder to find an amicable solution that works for all parties.
Make Difficult Choices
Letting go of staff can be distressing for you and them, but it is often the smartest business decision. Weigh up your options carefully and ensure that you retain anyone integral to business operations.
Downsize Your Office
Allow employees to work remotely and downsize your office to cut costs. If possible, consider giving up your office entirely. Use cheaper shared office space if you need to.
Diversify Your Revenue Streams
Pursue new channels of income. Broaden your horizons into other markets and avoid depending too heavily on one type of customer.
Drive Sales Using Social Media
Use social media to reach a vast audience of potential customers. Work with a professional marketing agency to get your business seen by as many customers as possible.