How to better manage your business debt
Small business owners quickly find that one of the most important aspects of running their business is their ability to manage their debt. The ability to do this successfully becomes critical in helping to determine whether your small business is able to flourish and grow, or quickly becomes one of the majority of failed small businesses. Managing your business debt becomes even more difficult for small business owners, who may be facing a number of challenges, such as holding too much inventory or sluggish receivables, which can send a business's cash flow into the red. However, despite a difficult economy and various other challenges, by identifying the areas where you can reduce costs and increase revenue, you can begin managing debt more efficiently and revive your business's cash flow. Here is what you need to know about how to manage your business debt-
- Constantly review interest rates-Interest rates change quickly, and if the interest rate on your small-business loan is significantly higher than current rates, you should consider refinancing to obtain a loan, with lower monthly payments. It is important before meeting with a lender, to review your credit report to make sure there are no blemishes. This is because a higher credit score is an indication, of successful financial management.
- Try negotiating with suppliers-You should not hesitate to ask suppliers for discounts, especially if you order in bulk. You can draw on your good payment history or on quotes from other suppliers, when negotiating flexible or extended payment terms, with suppliers.You can also consider partnering with other small-business owners, to make bulk purchases at lower prices.
- Rethink your space-If you are not using all of your square footage, you may want to consider subleasing unused space. If you can downsize on space to lower your rent, you may want to ask your banker, if he or she knows of clients who are seeking to rent additional space. Physical space is generally one of the highest expenses, for most businesses, and if you can reduce it you can better control your debt.
- Meet with your banker-This is often an overlooked resource, for many small business owners. It is important to remember that your banker can be a great resource, for ideas to help your business. You should not hesitate to familiarize your banker, with your line of business, and discuss your ideas, and your financial goals or concerns, with him. Once your banker becomes familiar with your business and industry, he can then facilitate introductions to vendors, suppliers, or other contacts, that may complement your business. These introductions can be especially helpful during tough economic times, when businesses may seek to pool resources.
The bottom line is that managing debt is integral to sustaining your small business's cash flow. Both methods of reducing expenses and increasing revenue can help manage your business debt. Finally if you are seeking help you should consider consulting a certified public accountant or a trusted financial advisor, for additional advice about managing debt.
These tips could help manage debt and increase revenue:
- Stay connected with your customers-One of the most popular tools available is the use of social media to get customer feedback about your products or services. You can answer questions customers may have about your business offerings, and inquire whether there are any related products or services, you could offer. Seek suggestions about ways you can improve your business. By knowing what you customers want and need you can focus on the right products and services, and avoid unnecessary debt.
- Increase your business exposure-Especially during these tough times; increasing your marketing and/or public relations efforts in creative ways could pay off. These may include creating a website if you do not already have one, developing relationships with your local media or joining organizations to enhance your networking and help increase your business exposure in the community. The bottom line is bringing in more customers' means more profit and less debt.