As a small business owner, you have a lot to manage—employees, vendors, marketing, inventory, and business strategy. And that’s not even an extensive list. Add business debt to the mix, and you suddenly have another item you have to juggle.
Debt can be necessary for business startup or to keep your operations on track. But it can also cause unnecessary challenges if it becomes unmanageable. To get and keep your business debt under control, here are some valuable tips.
What is Business Debt?
Business debt is money your business owes to a third party. A business might go into debt for a variety of reasons, some of them strategic. For instance, you might use small business financing to expand your business or purchase commercial real estate. There is nothing wrong with taking on debt as long as you can manage it.
5 Tips for Managing Business Debt
According to the U.S. Small Business Administration (SBA), only about half of businesses with employees survive to the five-year mark. Many businesses fail due to cash flow issues. If you own a small business, here are five tips for managing your debt.
1. Cut Unnecessary Spending
If you haven’t already done so, create a detailed budget for your business and go through it line by line. Look for costs that are taking your business further into debt. Are there ways you can reduce these costs or even eliminate them? Maybe you can clean your own office for a short period or pick up your own office supplies instead of having them delivered.
2. Boost Your Earnings
If paying your debts is a struggle, you can boost cash flow by increasing your earnings. This might be easier said than done. But think about some simple marketing strategies that can help your business boost earnings without breaking the bank. This might involve devoting more effort to social media marketing or even attending some community events.
3. Prioritize Your Debt Payments
You won’t be able to eliminate your business debt overnight. But you can analyze your situation and prioritize your payments. Decide which debt you want to tackle first. For example, debts with personal guarantees and those with high interests rates should be at the top of your list.
4. Talk to Your Creditors
Whether your creditors are banks or vendors, communicate with them. Before you take on additional debt, ask your current creditors if they will work with you on more favorable terms. See if you can get a payment plan that works for your business.
5. Consolidate or Refinance Debt
If the conditions are right, you may be able to consolidate or refinance your debt to get better terms. You can often combine different lines of credit to get an extended payoff period that has a lower regular payment.
Manage Your Business Debt With Customized Financing Solutions
When it comes to managing debt, there is no one-size-fits-all solution. What works for the business down the street may not be the ideal solution for your organization. At CAB Capital, we understand that sometimes a bank loan is just what you need. But you may also need something faster and more flexible. That’s where we come in!
We offer a variety of business and commercial financing options, including some specialty products, designed to meet the diverse needs of our clients. Contact us today to learn more about how our products and services can help you manage business debt.