Getting your business out of debt can seem like an impossible goal. However, all it takes is some effort and discipline, coupled with the right mindset. Below are six tips from Sharon Redd of Live All the Way to help you get your business out of debt and increase your long-term financial health while saving money in the process.
1. Create A Budget
The first step in getting your business out of debt is creating a budget. A good financial budget can help you ensure your business is spending less than it makes. While that concept may sound obvious, it’s actually very easy to make mistakes in this area if you aren’t being adequately mindful of your expenses. Put another way, you can’t fix a problem if you don’t know it’s there. If you implement software to run accounting for you, creating a budget should be simple. All the necessary information will be available at your fingertips.
2. Cut Expenses
Look over your most recent bank statement and make a list of where you spend your money. Are there any areas where you can cut back? Whether it’s going paperless or ditching the landline, cutting expenses now will help pay off your debt.
3. Increase Revenue by Pivoting
If your business is currently in debt and revenue is too low, you may need to re-evaluate your products or services. If your product or service doesn’t generate enough revenue, it may be time to pivot. For example, a bakery may need to switch from serving sweetbreads and pastries to offering more savory foods, such as sandwiches and salads, to increase revenue.
4. Work With Professionals
Getting a business into debt is easy; getting it out can be a bit trickier. But you don’t have to do it alone. Work with a financial advisor or accountant who specializes in small businesses, and they should be able to walk you through your options.
5. Find Grant Opportunities
To help offset your costs and make up for lost revenue, you can apply for grants. Bear in mind that these tend to be very competitive, so applying for a grant requires having an excellent and well-detailed business plan. Contact your local government office to see what resources are available in your area.
6. Sharpen Your Business Knowledge
The more educated you are about business, finance, and accounting basics, the better equipped you’ll be to figure out how to get your business out of debt. There are a lot of resources for small business owners when it comes to getting educated about finances and finding experts you can work with as you lower your debt. Look for free online courses, attend seminars and conferences, or even hire a consultant.
Also, cutting expenses won’t mean much if you’re subject to cyberattacks that totally derail your business and wreck your financial reputation, so take strong measures to protect yourself—and your customers—by installing antivirus software, keeping patches up-to-date, and routinely backing up your sensitive data.
Improve Your Business’s Health
It can feel like admitting defeat, but fixing your business’s finances will not only improve its health but also make you feel better about yourself and your company.