5 Ways to Dump Your Debt and Grow Your Small Business
To get off the ground, a lot of small businesses enter the marketplace with a ton of debt. There are operation fees, salaries to pay and product costs to account for. Getting rid of that debt can be extremely difficult, but dumping business liability is a lot like getting rid of personal debt. Really, the only disparity between the two is figuring out who is shelling out the cash. Most likely, that’s you! While you might want to pinch your pennies, you don’t have to avoid spending altogether. Here’s 5 of the fastest ways to become debt-free, and start on the path to growth and eventually into a metal building.
Create an accurate budget
I know, this is something you’ve done before, but it’s important to have an outline of all your expenditures and debts in writing. Do a cost/benefit analysis and keep a record of all your monthly business expenses. Then review the monthly income and line it up side by side. The money that remains after expenses are covered is cash that needs to go toward paying off the debt. It’s really time to buckle down and make some sacrifices. Even though you won’t be taking a profit right now, you have to look at the big picture. You’re going through this arduous process to get back into the black.
Monitor your credit information
Next, close all of your latest credit accounts and monitor your credit information regularly. Now is the time to stop and control your spending. Changes in your business credit score can occur over the course of just a few months, so it’s imperative to make sure your information with the credit bureaus is accurate and up to date. Changes in revenue, metal building location, number of employees, lawsuits, liens and other factors can all affect your credit score, which in turn can affect how you conduct business with customers, suppliers and financial institutions. Monitoring your business credit profile regularly can also help protect you against identity theft. Also, pay off the credit cards or loans with the highest interest rate first. Can you pay with cash? It might help to wean you off the business line of credit.
Cut your spending
Here’s the one piece of advice I’ve dreaded saying. Cut down on your spending and only purchase what you need. Comparison-shop like your mother-in-law does! She always gets the best deals, and you can do the same. Use the money you save on business items and put it towards extra payments on your outstanding bills.
Increase your income in preparation for a metal building
Now here’s the fun part. It’s time to ramp up your company sales and bring more people to your metal building. Do you take advantage of free advertising on social media, craigslist, or Google? You can also target some smaller sites to promote your business, and you might be surprised with the results. Once you’ve put your company name out into the information superhighway, offer specials, or sales to new customers, or deals to existing customers to bring them back to your storefront. A sale might at first reduce the amount of income you’ll make per product, but the overall “deal” you engage in should raise the volume of total sales. Remember, a lot of decisions you’ll make might seem like a tough choice in the short run, but they will pay dividends in the long haul.
Get professional advice
Another option is to talk with creditors. Businesses quite often set up repayment plans or consolidate their loans into one payment. This allows you to decrease your monthly expenditures without harming your credit score. At the very least, seek guidance from a non-profit organization that specializes in debt management or finance.
Once you’re completely out of debt, you can pursue your dream of moving into a metal building.
We have all sorts of helpful resources in the Small Business Owners Network to get you started.Photo courtesy: Images Money, 401(K) 2012, frankieleon