In many cases, business debt is inevitable, especially during the earliest phases in a company’s development. Depending on the kind of debt that it is, it could be eating into your profits and cash flow and keeping you from expanding your business the way that you want to. It makes perfect sense that you want to get rid of any business debt you accumulate as quickly as possible.
Let’s take a look at some of the different strategies that you can employ to reduce your company’s debt. You will see how you can gain peace of mind through business debt reduction.
- Work with your suppliers – In figuring out how to reduce business debt, one of the first places to look should be the suppliers from whom you buy raw materials
If you’re behind on payments, you want to work something out with your suppliers through smart communication and relationship management. Your company most likely depends on what your suppliers sell you, so you want to settle any outstanding debts with them first and foremost. Doing so will make sure that your relationship stays strong and that you continue receiving the items you need to provide your own goods and services.
- Sell, sell, sell – In order to reduce debt, you need to increase revenue. That much is obvious. There are several ways to go about doing that; the most straight-forward of which is to increase your sales volume and move more product out the door than you have in the past.
Offer incentives to your customers to get them to buy more, as long as its viable for you to do so. As you manage to sell more products, you can use the additional revenue to reduce your company’s debt.
- Restructure – When many business owners try to figure out how to reduce business debt, one thing they often fail to consider is how much restructuring might help them reduce debt.
There are several small, but significant things, that you can do to get closer to your goal of eliminating your company’s debt. These things include: selling surplus inventory and unused equipment, and cutting back on excess costs in the business.
- Reduce Your Operating Expenses – This item could fall in line with restructuring, or it could be its own strategy entirely. Think about the things that always cost your money around your business.
You have your utilities like electricity and water, as well as services like your Internet connection. Furthermore, you have the office itself, which you most likely pay a lease on. While it’s true that these things are the cost of business, it doesn’t mean that there aren’t ways to reduce them.
If it’s realistic for you to do so, consider moving to a smaller office or switching service providers for more cost-effective solutions. The money that you save could be reallocated to tackling your debt.
Likewise, you could consider alternative scheduling for your employees. If you encourage them to spend time working from home on their own schedules for part of the time, you can ease a transition to a different office. Furthermore, you may not need to purchase, power, support, and maintain as much equipment around your office.
- Look over your taxes – Speak with your accountant, CFO, or any other financial expert that you employ and they can help you figure out how to reduce business debt.
One way that they might do this is by going over what you pay in taxes and making sure that you are counting all of your eligible deductions throughout the year. It pays to do this often because tax laws are always changing and new tax breaks for businesses are always popping up. You want to make sure that your annual tax bill is always as low as it can be, according to the rules.
Keeping your debt under control is one of the most important things that you can do as a business owner. You want to make sure that you’re taking every step that you can to pay back creditors and keep outstanding debt balances from impacting your company’s bottom line.
When it comes to figuring out how to reduce business debt, there are a number of different things that you can do get it under control, keep it under control and get back on the path to success in your sector.
Grow your revenue, stay on top of the tax laws, look at ways to reduce overhead, and maintain your business relationships and you’ll be able to eliminate your company’s debt in no time.
Remember, running a business successfully does not need to be complicated. Keep it simple!
For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.
Manny Skevofilax is a consultant and speaker that helps his clients successfully navigate the challenges of growing their businesses profitably. Since 2003, Manny helps businesses enhance their results by using his experience in strategic planning, financial statement analysis, operations, organizational development, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at manny@portalcfo.com.