Drowning in debt can be the worst nightmare for small businesses. Although, at times taking debt might be the only option to start a business. It can even become a crucial need at some point. But note that debt dependency does not make it any less scary. It is a huge responsibility that snatches away a good night’s sleep.
Once you have taken a debt, it should be the foremost priority to pay it as soon as possible. But being a small business, if you are not sure how to perform debt management, we are here to tell it all.
What Is Debt Management?
Debt management is the process of taking care of your credit card accounts, balancing loans, and paying other related debts. For this, you have to prepare a proper, in-depth plan to reach the target of paying it all out in time. You can either do it yourself, take help from a business partner, or guidance from an advisor or credit counselor.
Let’s look into some practical tips that can help you deal with debt:
Take Help From A Credit Counselor
Careful spending can indeed save you from a lot of trouble. However, that might not be the choice you may have every time, especially when running a business. While a business credit card can you achieve some short-term goals, it can turn out to be a heavy burden for the future. Interestingly, not taking debts may slow down the pace of your business growth a bit, but your progress will be consistent.
A credit counselor will help you devise a debt management plan as per your situation. The counseling sessions will play a vital role in assisting in understanding your financial stance. Based upon it, he will give you practical solutions. He may also negotiate with the creditors to size down your payments. Your counselor will act as the payor on your accounts. In other words, you will send your monthly payments to him, and he will pay them to your creditors.
This entire procedure will help you understand the amount of debt you should pay each month to put an end to your debt. If you get trapped in a difficult debt situation, then taking help from a credit counselor can be a wise move. It will undoubtedly keep you on track, along with the surety that you are in good hands.
The Snowball Method
We have often heard how dividing a big problem into smaller chunks is always an effective way to resolve it. Dave Ramsey’s Snow Ball Method sounds similar to it. According to the snowball method, you start with paying off your debt from smallest to largest. It helps you recover faster, and these minor achievements keep you motivated throughout the process of paying it all. You stay focused, and it saves you from the pain of draining out emotionally.
Expand Your Growth Rates
To handle the financial curves, you can take steps to increase your sales. For example, go for loyalty programs. Rewarding your loyal customers can increase your chances of sales. The customers will feel values and will most likely start referring your business to others through word of mouth—a great way to gain new customers.
Be extremely diligent in providing exceptional customer service, as their happiness depends on your business’s increased revenue. It will help you understand their concerns, and prompt resolution will turn out to be financially beneficial. Social media is a great tool to interact with your audience directly. In turn, it will result in positive client reviews.
With the right tactics, you can put up sales and discount offers on large orders, resulting in increased sales. When your sales increase, you will be able to pay your debts quickly.
Moreover, if your clients are on a long-term payment plan, it’s time you reduce it.
Other Simpler Options
If any unused office supplies are placed in your office for no reason, it is better to sell them off to pay some of your debt. If the office space is ample and you can easily manage in a smaller one. It would be better to shift, even if not permanently. But till the time you are out of the debt crises.
Settle- Yes! If that is in the options, then take a chance. Instead of overthinking and continuing to drown in late payment charges, and stacking up your debt, even more, try to settle. But consider it as the last option as it does not have much success rate.
My EasyFi- Your First Resort To Debt Disentanglement
My EasyFi is your ultimate solution to getting rid of that annoying debt. The best money management software has countless features to fix your finances. With this expense tracking software, you can get access to strategies that will help you save wisely, invest for your business’s future.
It makes it easier to keep a close track of all your expenses. You can have a transparent outlook of how your money comes, where it goes, and so much more. With the debt eliminator software, you don’t have to worry about paying your debts anymore. The in-depth analysis of your business data combine with the debt tracker app helps you gain financial stability.
Debt is undoubtedly a tricky challenge to tackle, but you can overcome it gradually with time and the right strategies—practical financial planning tools and always wise decisions. However, once you are out of debt, it is vital to avoid retaking it as it can significantly damage the success of your business in the long run. Keep a check on your business performance, always follow a proper plan, don’t miss out to track your progress, and you will open doors of opportunities for your business.