Having a debt-free business is a dream every business owner has, but it may be realistically impossible. There are ways, however to have as minimal debt as possible.
It’s a known fact that small and medium business are the back bones of any country’s economy and help reduce the high unemployment rate we are facing. But this doesn’t make running a business easy at all. Operating a debt-free business may be impossible for many businesses owners but you can manage and reduce it as much as possible. This is how:
Do you know your numbers? It’s very important to know each amount that comes in and out of your business, from rent, labour and interest rate of your debt? Always be on the look out on what costs you can do without and avoid them. If possible find ways of negotiating your interest rates and payment terms with your bank.
Up sales and be firm with customers: The survival of any business is it’s customers, but if you have customers that don’t pay on time it can cripple your business. Find creative ways to make customers pay on time and create deals they can’t refuse to take. If need be, be firmer in requesting payment by having penalty fees for late payments. But make sure that you find out if there are any laws that regulate such fees in your field of business.
Bring in a debt management company: If you have been keeping your head above water trying to pay off debt, in addition to meeting other financial responsibilities it’s time to hire a debt management company that will help you identify where you are losing money unnecessarily. They might come at a price, but that’s an investment worth your time and money.
Do you need to reduce staff? This option is any business owner’s worse nightmare but can your business survive with the number of employees you have? Weigh in on what services your business really needs to thrive, from sales to marketing and determine if outsourcing is more affordable than having staff. If possible, negotiate with your staff if they can work on a freelance or consultation basis, instead of cutting ties with them completely.
How have you reduced your business debt?