Digging your Business out of Debt: Know your Options

Every entrepreneur starts a business with the aim of making profits and establishing an empire. It isn’t always the case with many businesses, especially the smaller enterprises. More than 50% percent of small businesses do not last beyond two years. Many of these business will admit one thing; their companies ran into debt and they were unable to get out of it, so they chose to shut down their firms. For someone who is so passionate about his business, closing down your business due to accruing debts should not be an option. Whether it is a small business or a multinational entity, there is always a way out. So what are some of your options? How do you ensure you keep your business up and running despite having debts?

1.  Increase your cash flows

It is so interesting how many people think when they are faced with business debt scenarios. Only a few people stop to think that such a time is actually the best time to increase their cash flows in order to settle their debts the easier way. Doing so might not be easy but it is possible. One way is by increasing efficiency and productivity. You should focus on new marketing initiatives if that can guarantee more income at the end of the month. It might increase costs in the short-term but you will appreciate the results over time.

Yet again, you can steady the cash flows by renegotiating terms with your vendors. Most suppliers will allow you to make payments two weeks or even one month after delivery of goods. For some suppliers, you can receive discounts of up to 10% on making earlier payments. You can take advantage of such options in order to have extra cash flows to settle your debts.

2.  Consolidate your loans

If you want to have lower interest rates and monthly payments, this is one of the best options for you. Paying different loans with varying interest rates can be a daunting task. By going for a consolidation loan, you will only be focusing on one main loan instead of several debts. This option can also come handy when you need to extend payment periods. You are probably expecting your business to do well in future. By taking a consolidation loan with a longer loan term, you will have a smooth time running your business and catering for other needs.

Before considering this option however, you might want to talk to your financial advisor and ask if it is the right option for you. Do your research on the possible limitations and make sure you have a solid repayment plan. Most importantly, look for the best creditors in the market offering manageable rates.

3.  Cut Operational Costs

The other measure you might want to take when dealing with business debts is cutting operational costs. This doesn’t need to have significant implications on the productivity of your business or quality of products. Shrinking your work force might not really be an attractive option but it is one worth considering when things get messier. If you have some equipment within the office which you barely use, you can trade them for cash and use part of the money in offsetting your debts. You probably have a large office space and are paying a lot of money for it. You can consider leasing part of the space, if that will make a difference. At the end of the day, what is most important is bringing down the regular operational costs to manageable levels. You will appreciate the cost savings.

4. Talk it out with your creditors

At times, you do not need to stress yourself when you can actually talk it out and negotiate better terms. For businesses, financial situations change. Good creditors should be able to understand. If you have been loyal in making your payments in the past, you can contact your creditors and be certain of getting better terms. If possible, get in touch with them as soon as you realize you are not able to make your debt repayments due to financial difficulties. With better terms, you can walk away with increased credit lines, restructured loans or even lower-interest loans.

5.  Consider Debt Relief Agencies

Negotiating with some creditors can be a harrowing experience. If you have problems sorting it out with individual creditors, you can seek help from debt relief agencies such as nationaldebtrelief.com/. Such institutions are able to negotiate with your creditors for better payment terms. You can also get advice on how to go about the repayments. During such trying moments, you need help. Taking advantage of debt relief agencies can be a great option. Just like in other situations however, you will need to be through in your research, leaving no room for mistakes.

It’s never too late

It is so easy to feel overwhelmed when your business has accrued so much debt and it is on the verge of collapsing. Before filing for bankruptcy, stop for a moment and imagine billion-dollar empires like those of President Donald Trump having huge debts. A recent study showed that Donald Trump’s business owes more than 150 institutions money, with the debts accruing to over $1.8 billion. During his campaign, he only declared owing money to 10 different lenders at a total cost of $315 million. However, a recent study by Wall Street Journal reveals something different.

It is believed that companies Donald Trump partly owns owe an additional $1.5 billion to other creditors. That might explain why he had issues making public his official tax returns during the elections. If he has never acted like someone who owes billions of dollars to creditors, then you have no reason to succumb to the pressure of your debts.

Conclusion

You might not have been able to make sound borrowing decisions while seeking financial assistance. However, that doesn’t mean you should sell your business and settle debts when creditors come knocking at your door. You have options; it all depends on how best you explore them!