Sometimes you need to take on debt to run your business. But often, all it takes is just one cruel twist of fate to leave you with a mountain of debt and no way to pay it back.
If your business is dealing with debt problems, it doesn’t need to be a death sentence and there very well may be a way out.
In this post, we’re going to view how you can manage your business debt problems. Take note of the content in this post and you should find it easier to overcome the debt issues you’re facing.
Understand the Situation
The first thing you need to do is understand the situation. How much debt do you owe in total and what do your monthly payments look like? How much money does your business have in the bank? How much money do you expect to come in every month?
You also want to think about any costs your business is going to face on a monthly basis, outside of these debts.
If you can, reach out to the lender to let them know about your situation. They may be willing to adjust the payment plan to make things easier for you.
You also want to think about what got you into this situation. This isn’t to make you feel bad about yourself. It’s just so that you don’t fall into the same problem again in the future. This can help you come up with ideas on how to grow your business, without needing to dig deeper into debt.
Does Anyone Owe You Money?
One of the facts about running a business is that customers can sometimes be slow to pay.
This can mean that you likely have some outstanding invoices. If this is the case, chase them up so they can process your invoices. If they don’t respond to emails, give them a phone call instead.
Once the invoices are paid, think about whether you want to work with this company in the future. Sure, you need to bring in money for your business. But late-paying customers can sometimes be the reason you’re in debt. That is because their late payments can hurt cash flow.
The money they’re supposed to pay you might be needed to run the business. But if they don’t pay you, you’ll then need to take out debt to pay wages or the cost of delivering projects for a client.
It can be hard to say goodbye to clients in a situation like this. But you need to take a moment to judge whether doing so is actually a good thing for your business.
How Can You Make More Money?
When you get down to it, the goal of a business is to make money. So once you’ve done some of the due diligence mentioned above, think about how you can improve revenue.
Your existing forms of lead generation might’ve required for you to spend some money. You may have used paid ads, for instance. But if you’re running low on cash, this probably isn’t an option.
When you’re in a situation like this it can be a good idea to generate some referrals. Odds are you have customers you’ve already worked with. A portion of these customers may have received a service so good that they’d be willing to refer someone your way. At the very least they’d be willing to make an introduction.
Since you’re in a challenging scenario, you can’t wait for this to happen. You’ll need to be proactive and reach out to past customers, asking them for referrals/introductions. As mentioned, if they were happy with your work, they shouldn’t have a problem with this.
You might also want to research other inexpensive methods of generating sales. One example of this is cold emailing. Cold emailing can work very well if you put a lot of time and attention into your emails.
Develop a Plan
As you begin to see results from the efforts mentioned, you’ll then want to develop a plan that’ll help you move forward. This plan is designed to do many things.
Firstly, it’s going to help you figure out how you’re going to continue to grow your business.
Based on the kinds of results you achieve with your marketing, double down on what works best. Work out a ‘conversion rate’ of sorts for this method. This’ll help you predict your expected revenue numbers for the upcoming months.
Using this information, you can then develop a plan that’ll help you decide how you’re going to pay back your debt.
If your revenues are stronger than expected, you may be able to pay back the debt faster than expected. If you’d like some help paying back the debt, reach out to a company that can offer some support. If you’d like to see an example of such a company, you can view here to find out more.
Are You Ready to Banish Business Debt?
Business debt can be a tough thing to deal with. But with the right approach, business debt doesn’t need to mean the end of your business.
In this post, we’ve reviewed some of the things you can do to tackle business debt. It’s important you understand the current situation. You also need to think about how you can collect revenue from people that owe you money. It also helps to consider how you can grow your business, to generate the funds needed to pay the debt.
As soon as your efforts start to pay off, it helps to map out the future. This will give you some hope that the debt is manageable and that you will be able to eventually pay it off.
Interested in how you can find bankruptcy resources? Check out this post for some tips.