When you’re a small business owner, running up debt is part of the game. You have to invest money to make money. However, it can be easy to let those overhead costs get the better of you, and before long you could find your small business in an unmanageable amount of debt. And you wouldn’t be alone. In fact, Chapter 11 bankruptcy filings peaked in March of 2018, reaching numbers not seen since April 2011, when businesses across the country were working to climb out of the Great Recession.
If your business’ finances have gotten out of control, or you’re worried they could, read on for a few vital tips and steps prevent and eliminate business debt.
- TAKE STOCK. The best way to capture an accurate picture of your financial status is to take a thorough inventory. Sort through and itemize every source of debt to creditors and vendors, and resolve to prioritize paying off the items that carry the most interest.
- BE UPFRONT WITH CREDITORS. Terrifying as it may seem, being communicative and honest with those you owe could result in you being able to develop a manageable payment plan. Also consider asking your creditor about a hardship program. Different from typical credit consolidation businesses, hardship programs are often offered within your credit card companies. And it’s possible that if you go this route, the customer service representative on the phone may not be fully informed about the company’s hardship program, so keep asking until you can get your answers. Make sure you’re clear on whether it would negatively affect your credit score, too.
- BE WARY OF TOO-FAST GROWTH. While growth in your business feels like a dream come true, growing by leaps and bounds can lead to cash flow mistakes, rash decisions, and ineffective business operations. Strive to keep your growth in check, and be cautious and watchful with each new gain.
- CONSOLIDATE WHERE YOU CAN. Consolidating multiple credit payments into one long term payment plan can be one of the smartest debt-management steps you can take. Your credit score won’t take a ding, and chances are you’ll enjoy a lower interest rate.
- GO VIRTUAL. Utilizing the virtual office assistant, mail handling, and periodic office suites available at Pacesetter Workspaces can help you keep your overhead costs in check, while still maintaining a professional impression. Our office assistants are trained, skilled, and ready to handle your business needs, all at a fraction of the cost of maintaining private office management staff.
While small businesses are bound to incur debt, there are steps you can take to prevent your debt from crushing your small business dream.