Businesses typically start under a cloud of debt. Most people starting up small businesses today simply do not have capital just lying around in their personal bank accounts which leads to the need for loans or credit cards in order to get their business going. Once you begin in debt however, it can seem more than difficult to get out. If you feel that your small business is literally drowning in debt, there are a few things that you can do to pull yourself out without having to consider bankruptcy.
- Stop Spending – This is the most important thing that small business owners can do to eliminate debt. If you do not have to spend, then don’t. Think about what you need regarding actually running your business and eliminate all unnecessary or unwarranted costs. If you do not need new computer systems then continue to use your old systems until your finances are in a bit better shape. If you have office equipment that you are not using, consider selling it and adding a bit to your cash flow. However you do it, eliminating excess spending is critical in getting your business finances under control.
- Consolidate – If you have several loans or credit cards, think about putting them all together into one product. Loan consolidation can help you to lower your payments and enjoy a bit of a breather from that pile of debt. You may find that interest rates are lower if you choose a consolidation loan over credit cards and you can turn many different loan payments into just one convenient payment.
- Restructure Your Budget – If you are unable to pay your debts then perhaps your company is not sticking to a strict enough budget. Take some time and go through your budget, cutting out anything that is unnecessary and ensuring that you are allowing enough each month to meet your debt obligations. Ensure that you are actually making enough money to cover your fixed monthly fees such as rent and utilities. Once you have enough allotted for these costs, add an amount in for bringing down your debt a little at a time.
- Call Creditors – If you know that you are having difficulties in paying your creditors, call and speak with them. They may actually surprise you and offer you a lower payment plan or many may give you a settlement amount that is lower than what you actually owe. You never know unless you ask so be sure that you call and speak with your creditors to see what you can do.
- Get Help – If all else fails or you find that your creditors are a bit less than enthusiastic about helping you, seek the assistance of a professional debt management company. Professionals can help you to better structure your budget and ensure that you have enough set aside each month to actively begin paying down your debt. These companies are experienced and can assist you in getting your business out from under those piles of bills and operating completely debt free.