No one likes the thought of owing money. But as many business owners know all too well, there's often no way around having debt. Fortunately, though, there are some healthy ways you can shed that excess debt for your business and pump up that bottom line:
These methods include:
Talking to your lender. If you want to renegotiate more favorable terms on your existing loans, start with the lender who placed confidence in your business and gave you the loan in the first place. They may be willing to restructure your loan to more favorable terms.
Consolidating and refinancing existing debt. Do you have multiple loans with higher interest rates? You may be able to consolidate and refinance your loans to help you save interest and fees.
Redoing your budget. One of the most important things for business owners to do is to run and review financial statements regularly to gain a better understanding of their expenses. Once you know your expenses, look for ways to reduce expenses and save money that can be used toward reducing your debt.
Improving your cash flow. Having operating cash will help reduce your need to borrow. And nothing gives your cash flow a boost more than increasing your sales. You can accomplish that by building the relationships you have with your customers through cross-sell opportunities. You can also improve cash flow by working your accounts receivable. Consider offering payment discounts to those who pay earlier.
Managing your inventory. Having excess inventory can put a drain on your cash flow and your bottom line. You can help reduce inventory costs by eliminating overstocking, minimum orders, and obsolete items.
Raising capital. If you want to reduce the money you owe, consider finding investors or researching grants.
The most important step is to make managing your debt a priority. Determine how much you owe and create a plan to start shedding that debt. You can do it!