Preliminary Actions You Can Take as You Consider Courses of Debt Relief
by Mashum Mollah Loans & Credit 11 July 2017
Whether or not you intend to continue running your business is perhaps the most important consideration to make when deciding which form of relief to use for your small business debt. If you plan to keep operating your business, choose a method that does the least harm to your business, and personal credit scores.
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Refinancing or consolidating your small business debt, for example, is preferable because it reduces the frequency of payments, increases the repayment period, and lowers the APR. Getting these types of loans is not as difficult as you may think and they can go a long way in providing relief from overwhelming small business debt.
If, on the other hand, you don’t plan to keep the business running, the forms of relief you consider can be aimed toward eliminating as much debt as possible while ensuring that you do not lose your personal assets. As you consider which method of debt relief to employ, take the following actions to help reduce the burden.
Restructure Your Business Budget
Before you embark on relieving debt, make sure you’ve done all you can to optimize your business budget. By monitoring all your expenses, you can come up with ideas for improving your cash flow in a way that makes your business debt more manageable. Actions you should consider include:
- Promoting products/services that generate the highest margins
- Considering raising product prices
- Doing away with unnecessary expenses
Below is a closer look at these actions.
Promoting Products/Services That Generate the Highest Margins
If you offer a wide range of products or services, some of which generate low margins, consider focusing your promotional efforts on those that earn your business the highest earnings. Higher sales of products with the highest-earning boosts your bottom line, earning you more liquid cash that can be used to pay off your debt.
Raising Products Prices
Conduct market research to find out which of your products/services you can offer at a higher price. Determine how much you can increase the prices without losing customers and losing your competitiveness in the market. Thereafter, raise your prices accordingly in order to improve your revenue, and earmark the additional revenue for the reduction of your debt.
Doing Away With Unnecessary Expenses
The first step to getting out of a hole is to stop digging. As a small business owner, among the main actions, you should take to make your budget leaner is eliminating unnecessary expenses. Doing so will go a long way in improving your business’s cash flow and helping it free up funds that can be used to reduce your small business debt. Make a list of all your expenses and arrange them in order of priority.