Running a business is not without risk. Regardless of the type of business you have or its size, you cannot manage it without taking risks. Lending money or borrowing is also a risk.
As a company, you need to take out a loan for many things. Likewise, it is necessary to provide services to customers on a credit basis. Both of these situations are inevitable.
Taking a loan means that you will be in debt and, if you do not pay it, it can lead to various consequences.
For example, the creditor can sue or hire a debt collection agency to recover their losses. That’s why you need to manage corporate debt. A business with tons of debt won’t last long in the market. So, here are some ways you can manage your debt before it all goes south.
Here are some steps you can take to manage your debt.
- Before taking action, find out your situation
It is essential that you understand your situation, in the sense of how many debts you owe and to whom? Prioritize debts if you have multiple debts and pay them one by one. Also understand your budget and find out ways you can pay off debt without making a hole in the budget. Also, be sure to do everything you can to start paying off your debts, even if you start small. If not, other companies or lenders may file a lawsuit.
Also, if you don’t pay government taxes or loans, you run the risk that the government will overtake everything you have, including your possessions and your home.
- Increase your revenue streams
The quickest way to pay off debt is to get more income and money. To do this, you need to find ways to increase revenue for your business. Here are some ideas:
Offers and discounts: You need quick cash and the easiest way to do this is to offer discounts or offers. It caters to tons of customers, who will pay you cash for these services.
Goods: It will take a bit of investment, but consumers love buying products from their favorite brand. Who doesn’t own a cup of Starbucks? Quite right? So if your target market has the same purpose, try selling these products for a lower price. It could help you get money quickly to start paying off debt.
Increase prices: It’s a little contradictory from the first point, but if your products have high market demand, this may work. It’s a great way to make sure you get a good profit on your services and pay off debt. Even a small amount can keep the collection of your good books steady, as it assures them that you will pay on time.
Social media: Start promoting your small business more on social media. These platforms can increase your sales and increase revenue which is the point. It’s also cheap, you need the right content and consistency to get traffic through social media.
- Renegotiate the terms of the loans with the bank
A bank wants its money so they are open to renegotiating terms. You can speak to the manager to:
- Either by lowering the interest rate, or
- Increase the loan repayment period. It will give you enough time to figure out a solid plan for paying off debt.
- In some cases, the bank or lender may even renegotiate the amount and accept a partial payment or a lower amount.
Be proactive since the bank or lender does not want to lose money, and will do so if you fail. So if you provide real facts and figures, they could apply to any of these terms.
- Reduce business expenses
Another way to reduce the budget and use the reserve to pay off debt is to reduce business spending. You can do it through:
- Leasing of a small space or elaboration of co-working spaces. It’s a great way to cut down on rent and maintenance, and if you’re not using the whole place, why pay for it?
- Instead of hiring new employees at a time like this, choose freelancers or consultants. But be careful, it can be more expensive if you are not careful.
- Ask for discounts from your suppliers.
When you cut costs, be smart. Don’t cut the costs of the departments that will help your long-term business. It can be counterproductive.
Trying these methods is good, but at the same time be realistic. Some companies do not survive and do not go deep in personal and corporate debt to save one, which cannot be saved.
The effective post 4 way to manage debt first appeared on TechZimo.
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