When you own your own business, you are constantly juggling things, including both your personal and business bills.
It can be stressful having to keep track of essentially two separate sets of finances for yourself and your business. Sometimes this juggling act leads to business debt. Other times you may be forced to take on business debt to launch new products, or grow your business.
But, no matter the reason why you take on business debt, it’s still stressful to have it hanging over your head. That’s one reason why it’s important to pay off business debt quickly.
Here are some tips to help you pay off business debt quickly.
1. Eliminate Unnecessary Spending
Similar to your personal debt, one way to help you pay off business debt is to immediately slash any unnecessary spending.
Examine areas where you are spending money every day that could be done away with, such as your morning coffee run. Take the extra few minutes of time needed to make it yourself, and you will be surprised at how much money you are saving each day. Even if you shell out for some fancy coffee makers for the break room at your office, it can still save you money after a few weeks by not buying coffee elsewhere.
Cutting unnecessary business spending can help by allowing you to apply those dollars towards paying down your debt right away.
2. Call Your Creditors
If you need to get your business debt down fast, call your business creditors to see if they will work with you. For example, you could ask your credit card company whether or not they would help you out by lowering your credit card interest rate. This will help more of your money go toward paying off the balance instead of being eaten away by high interest rates.
Even if you think a creditor will say no, it couldn’t hurt to ask. It’s possible they surprise you by agreeing to help. Also, keep in mind it’s in their best interest to work with you. Companies you owe money to would rather work with you to get some money instead of having you file a business bankruptcy causing them to get much less or nothing at all.
3. Create a Business Budget
Another way to help you pay off business debt in a timely manner is to create and stick to a business budget. If you don’t already have one, it could be one of the reasons you are in a financial pickle.
Gather all of your bills and start with those that can’t be eliminated if you want to stay in business. Next add the others you consider necessary. Build your budget from here and put as much money as you can afford toward paying off your business debt.
4. Formulate a Plan to Increase Revenue
There are no shortage of ways you can generate some extra revenue to help pay down business debt quickly. While you are working on a plan, be cautious about sharing any of this information with anyone. Word of mouth can travel fast, and if you give even a hint that you are having any financial difficulties, it could hurt your business sales, contracts, and other agreements.
That being said, you need to come up with a plan to help you increase your revenue so you can get debt paid off fast. Here are some ideas that could help.
Have a Sale
Although you might be thinking now is the time you need to get top dollar for the goods or services you provide, you may be able to generate extra income toward your debts by having a sale.
If your business is in the service industry, offer incentives, such as a set amount that can be saved through increased business. However, if you sell products instead, mark them down and advertise a sale.
Belinda Rosenblum did this to help pay of her business debt in 2015 and it helped her generate enough revenue to pay off $10,000 of business debt in a few short months.
Ask for Referrals to Get Extra Clients
Offering your customers a discount for successful referrals is one way to generate new customers and increase your sales.
For instance, if you are able to cash in on any of the referrals they give you, give them a 10% discount on their own bill.
5. Cut Charitable Giving
When your business is facing financial hard times, you may have to stop giving unnecessary discounts and eliminate your charitable giving, at least temporarily. Wanting to help others is a good and admirable trait. But, sometimes you have to think of your own business’ needs. When you free up extra dollars, it can help you get those debts paid off and ease your stress and tension. Once your debts are paid off, you can go back to giving to others.
6. Consider Debt Consolidation
One other choice for you to consider is debt consolidation. Sometimes you can combine more than one business loan or credit card balance into a single loan. By doing this, you may be able to obtain a lower interest rate to help pay your debt off faster.
Carrie Smith, founder of Careful Cents, is paying off business debt she acquired a little over a year ago. She chose to consolidate her debt to save money and simplify her finances.
“I took a different approach paying down my business debt than I did when I paid off my consumer debt back in 2012.” Smith said. “I consolidated my business debt, that was spread out on several credit cards, into a business line of credit. This allows me to make regular payments every month and only pay around 7% interest, instead of the higher 15-22% interest rate on my credit cards. Plus, it’s much easier to juggle one payment every month instead of several different due dates.”
Smith said she also pays extra on her business loan whenever she has leftover money in her business budget. However, she knows that trying to be too aggressive with her debt pay off could leave her business account short of cash for operating expenses. She says so slow and steady is the way to go.
Make sure you do your homework before agreeing to a consolidation. This way you can make the best overall choice for your business needs.
Are you trying to pay off business debt? How are you making it a priority?