How to Get Your Business Out of Debt

Is your business dealing with debt? If you’re like many small businesses, the answer is likely yes. While taking on some debt may have been necessary to get your business off the ground or navigate a rough patch—like the pandemic—now is the time to get it under control and secure your long-term financial health. To help you tackle your business debt once and for all, check out the following tips!

Invest in Education

Learning how to manage a business and make smart financial decisions is an important part of becoming a great entrepreneur. Thankfully, there are countless resources out there that can teach you what you need to know about the economics of running a business. For example, you could go back to school and enroll in an online MBA program to expand your skills in accounting, economics, corporate finance, and strategic planning. The benefit of an online program is the flexibility to learn on your own schedule, so you can continue running your business at the same time.

Consolidate Your Debt

Business debt consolidation might be a good option if you’re carrying a number of different business loans. By consolidating all of your debt into a single loan, you’ll have an easier time managing payments. Plus, taking out a new loan is a great opportunity to seek a lower interest rate, so more of your monthly payments go towards reducing your balance. There are several types of loans for debt consolidation, from bank loans to lines of credit, so be sure to review your options before talking to lenders.

Revisit Your Budget

Budgeting is key to reducing debt. If you want to start contributing more money to your debt repayments, you will need to adjust your business budget accordingly. Find out where your money is going and consider whether this is the best use of your funds. If you’re not sure where to start, expert bookkeeper David Bialecki can help you come up with a business budget or rework your existing financial plan.

Make Expense Cuts

While evaluating your budget, you may uncover potential areas where you can reduce your business expenses. Making expense cuts will free up more working capital for your debt payments, so you can get those loans paid off more quickly. Perhaps you can cancel a few subscription services that you don’t get a lot of use out of. Or maybe you can reduce the size of your in-house team and hire remote freelancers to save labor costs. There are so many ways to reduce your ongoing expenses, so take the time to explore your options and uncover opportunities to save.

Look for Low-Cost Ways to Increase Revenue

Generating more revenue is another way to pay off debt faster. Of course, increasing business revenue often means increasing your marketing expenses. Instead of targeting new customers with your advertising, focus on encouraging repeat business from your existing customers. This is a much more affordable way to drum up business. Delivering exceptional customer service is one of the best ways to encourage repeat business, but Peek Pro also suggests offering referral bonuses and extending exclusive offers to returning customers.

Another way you could save and reduce your debt is to change your business entity. Many entrepreneurs enjoy tax benefits by establishing themselves as LLCs. Instead of hiring an attorney to register your Florida LLC, you can save on expenses by using an online formation service.

Holding onto a lot of debt can prevent you from reaching your business goals, or worse, lead you towards bankruptcy. Don’t let debt derail your success! Whether you’re coming out of a sales dip or finally getting your business off the ground after a slow start, try to tackle your debt as soon as possible!

Looking for accounting and bookkeeping help for your business? David Bialecki can help you get your finances under control and grow your business. Complete this form or call (407) 222-9934 to schedule a free 30-minute phone consultation!