6 Tips to Help You Get Your Business Out of Debt

6 Tips to Help You Get Your Business Out of Debt

According to estimates, the average Canadian business has about $177,000 in debt. It is normal for most companies to carry some debt, but too much can put your business at risk. These tips can help you reduce your commercial debt.

1. Invest in Accounting Software

If you’re not maintaining accurate books, it’s going to be very difficult to create a budget, lower expenses, and boost profits—essential steps for getting out of debt. An online accounting system keeps all your financial information in one place, and you’ll have access to real-time profit and loss statements and cash flow insights. The better understanding you have of expenses and incoming revenue, the easier it will be to develop a debt-reduction plan for your business.

2. Create a Budget

The first step in your debt reduction process is to create a budget. Gather your bank statements and bills for the last year. Make a list of all of your revenue sources and expenses. If you have multiple types of revenues and expenses, it can be useful to categorize them. Once you have your list completed, you should have a picture of how your income compares to what you are spending. If you are bringing in less money than you are spending, you need to increase revenue, reduce expenses or both.

3. Reduce Expenses

Go through your budget to look for unnecessary spending that you can eliminate. Make note of any necessary expenditures that you may be able to reduce by changing your operations, negotiating with vendors or purchasing from a less expensive source. Assess ways that you can reduce your tax burden. For example, incorporating may decrease your tax bill. The rules may vary depending on where you live, so you may want to work with a formation service to ensure compliance and avoid legal fees.

4. Increase Revenue

There are a variety of ways you can increase revenue. You can find ways to sell more to your current customers, find new customers to sell to or add a new line of products or services. If you aren't sure how to increase your revenue, consider sharpening your business skills by going back to school.

An online master of business administration program can increase your knowledge of marketing, economics, strategic planning and research, which may help you create strategies for boosting your revenue. Completing an online program allows you to balance running your enterprise with taking care of your family and completing your degree.

5. Consolidate Debt

Consolidating your debt won't get rid of it, but it can simplify paying it off. However, this method is only effective if the interest rate on your consolidated amount is lower than what you are currently paying.

It may be helpful to search out grant opportunities as sources of funds to pay down your bills. There is a lot of competition for most grants, so you need to have a solid business plan and know what to look for. Choose grants that are specific to your industry and take care to prepare a high-quality grant application.

6.Hire Some Help

A neutral third party can be helpful when it comes to finding debt solutions. Consider working with a mentor, a company that helps businesses restructure debt or a bankruptcy attorney. If you are not already utilizing a financial planner or an accountant, consider hiring one. There are also software packages you can use for budget planning, sales forecasting and other relevant tasks.

The longer you wait to deal with your company's obligations, the more difficult it will become to do so. Use accounting software and the tips above to start creating a plan to reduce what you owe today. Having a strategy in place can increase your chance of successfully eliminating debt and reduce the amount of financial stress on you and your business.

Guest Blog Tina Martin 

Jennifer Grant International can help you enhance your brand, improve your image, and grow your business. Book a free consultation!

 

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