Taking on debt to launch your business can be a good thing—it can help you finance your company, buy more items, or expand your offerings. Things might be running smoothly for a few months or even years, but at a moment’s notice, sales can quickly decline, increasing your debt.
You must remember that debt can cause a significant financial impact if it keeps growing, and if your business isn’t meeting sales projections, you may have to shut down. However, there are a few tips you should follow to help reduce your financial problems. You may also want to consider reaching out to one of the debt attorneys at McCarthy Law. They can help you manage your finances and negotiate with lenders to reduce how much you owe.
Look at Your Budget
Before you take any steps, you should thoroughly examine your current budget. You need to understand where your money is going and determine if that’s the best way to spend funds.
A good rule of thumb for a business budget is categorizing your money into daily, monthly, and annual costs. The budget should also account for rent, utilities, and an emergency fund. Ultimately, assessing and reworking your finances is the first step toward tackling your small business debt.
Cut Costs
When times are tough, you have to look at all your expenses and cut unnecessary costs. If you still have items on your shelves and a stockpile in the back, you should hold off on buying new products. Similarly, you can stop ordering less popular items altogether.
Depending on how much debt you’re in, you may have to take more drastic steps. You might only need one truck at the moment, so consider selling the rest for additional funds. You may also have to consider laying off employees or reducing store hours. If your debt is significant, you’ll most likely have to cut or reduce costs in multiple ways.
Pay off Debt
After you look at your budget and cut costs, you should then focus on starting to pay off your debt. Determine which debts will affect your business the most, such as ones with vendors. Failure to pay vendors may result in an inability to purchase from them in the future.
Also, consider prioritizing debts with the highest interest rates and penalties before other loans. The longer you wait to pay those loans, the more interest you’ll have to pay, only keeping you in debt longer.
Increase Your Sales
This may be easier said than done, but there are plenty of steps you can take to increase your sales. Promotions will generate more interest from your current customers, and it will also market to new customers. Store sales and coupons are a great place to start. Promotions encourage people to come into your store, and they’ll actually spend more on other products while there for a deal. Be careful, though. You need to make sure you don’t discount your products so much that you lose money.
You can also look into raising your prices, but don’t overdo it. Only increase the cost on certain items by a dollar or two. The last thing you want to do is scare away your current client base.
Seek Assistance from Expert Debt Attorneys
Don’t let your business go under because of your financial troubles. The business debt settlement attorneys at McCarthy Law dedicate themselves to helping clients navigate their financial circumstances and reach a favorable debt settlement. To schedule a free consultation, call our office at (855) 976-5777 or complete an online contact form today.