According to statistics compiled by the Small Business Administration, about half of small businesses close within five years. Of the reasons cited, insufficient cash flow and debt are among those commonly listed. Clearly, for small business owners struggling to survive and stay financially afloat, getting rid of debt should be a top priority.
But the question is how? Although the economy has been gaining considerable momentum since the dark days of the recession, there are still many business owners who are suffering the aftereffects of having taken out loans during that period to pay their bills or increase their cash flow.
The following are five suggestions courtesy of Debt.org., an Orlando, Florida-based site that offers people information on relieving debt. These takeaways should help small business owners eliminate or significantly reduce their financial burdens.
1. Do a monthly budget
This will help you calculate just how much money you need for your business and how much can be earmarked for paying off your debts.
2. Cut costs
Sometimes just trimming excess expenses from an operating budget is enough to get a business through troubled times. Are there membership fees to groups and organizations that you no longer need? Cancel them so the money isn’t coming out of your account every month or quarter. If there is equipment that your business no longer uses consider selling it. If you do need it down the line, it might be more cost efficient to lease or rent it.
If you owe them considerable money for past services rendered, try to speak to them about arranging to increase your credit line, reduce monthly interest rates, or restructure your repayment options.
4. Consolidate loans
Dealing with one creditor rather than several can lighten your financial burden and save time. Research loan consolidation companies that can help you navigate the process without tacking on additional fees.
5. Offer marked down items to customers
Not only can this elevate your profile within your community and attract customers, both new and regular, to your business (you can promote a big sale or discount at your store through print/digital media as well as word of mouth), but it might be a good way of generating extra income that can allow you to stay on top of bills.