by Mary Shannon (Guest Author) | SeniorsMeet.org |
Seasoned business owners know that debt isn’t always bad. In fact, taking on debt can help you finance your company, purchase equipment, and expand your offerings. The downside is that debt can become overwhelming if you don’t hit your sales projections or some other obstacle spins it out of control.
If you’re over your head in business debt, you need to act quickly to prevent it from destroying your venture. That’s why Dion J. Jayakoddy Retirement & Insurance has put together some practical, proven tips for how you can do just that!
Bring Structure to the Mess
First of all, you need to organize all of your debts. Consider making a basic spreadsheet to list each individual debt, and be sure to include details that can help you strategize going forward.
For example, you will want to write out the total remaining balance, monthly payment amount, interest rate, due date, and other essential information for each item. Knowing what you owe and when you need to pay it will help you to come up with a plan of attack!
Cut Spending, Boost Income
While there are differences between business and personal debt, you can come at the two with a similar approach. At the end of the day, debt comes down to spending and income. If you figure out how to reduce your spending, it will leave you with more funds to pay down debt, along with helping you avoid new debt. Likewise, boosting revenue will mean more money to put toward debt, and it also happens to be an indicator of a growing and healthy business!
Evaluate all of your business expenses, and eliminate anything that is not absolutely necessary (e.g., unused office space, expensive lunches, new office decor, etc.). Speak with your vendors about coming to new terms on your contracts or prices. And figure out how you can improve your invoicing process. This might mean investing in new software or hiring an accountant, both of which will cost you upfront but can save you a lot of money in the long run.
Establish and Expand
If your current legal structure is not doing your business any favors, it might be time to make a change. For instance, by setting up an LLC, you could potentially get tax advantages and liability protection. This could go a long way in helping you gain a stronger financial footing. Of course, each state has rules and regulations pertaining to establishing and maintaining business structures, so make sure you understand what your state requires from your business.
Something else to bear in mind: in today’s ultra-competitive business environment, everyone needs an edge. One great way you can boost your skills – and your business – is by going back to school for a business degree where you can learn more about economics, accounting, corporate finance, marketing, and more. Best of all, thanks to the flexibility of online programs, you can also keep working as you learn!
Go to the Source
If you know that you are about to get behind on your debt obligations or are already in the hole, consider contacting your creditors. Being proactive can help you keep your circumstances manageable. Many creditors will be willing to work with you if you are in a bad spot, but you need to communicate with them early. Things to speak with your creditor about include consolidating your debt, reworking your repayment requirements, and lowering your interest rates.
Hire a Professional
We mentioned working with a professional accountant, which can go a long way in keeping your business finances well-managed. But you might also consider hiring a professional to help you get your debt under control.
Chances are there are firms in your area that specialize in helping entrepreneurs formulate effective business debt strategies so that they can avoid bankruptcy. Just be sure to thoroughly research any company you are considering. If they make a promise that sounds too good to be true, it probably is.
Senior entrepreneurs bring priceless real life experience to the table, which gives them a unique ability to weather financial troubles. So don’t let your business debt keep you from pursuing your dream! Start making a plan now for getting yourself out of the hole and putting your company back on track. Along with following the tips above, keep researching other methods of debt management and find a trustworthy professional who can walk through the challenges with you!
Dion J. Jayakoddy Retirement & Insurance is an independent insurance agency that has been continuously dedicated to overseeing the insurance needs of San Joaquin County for more than 20 years. Call (408) 390-5079.
Photo via Unsplash
About the Author: Mary Shannon
Mary Shannon created SeniorsMeet.org, along with her husband, Bob, to have a website that allows seniors to meet up and talk about topics that are relevant to their daily lives. They hope to build SeniorsMeet into a supportive community of like-minded seniors.