Four Ways to Manage Your Small Business Debts

Every startup business will at some point require a loan to facilitate its operations. However, the problem is that many end up suffering from too many debts. Roughly, 50 percent of small businesses fail within their first five years, majorly because of insufficient funds, poor credit arrangements, and too many unmanageable debts.

Borrowing is necessary for every entrepreneur. It comes in handy when you want to focus on finance growth, expansion, or increased cash flow. But like any other strategy, this might fail and your small business ends up having borrowed too much money without having the potential to accumulate back what they owe.

In such a case, a small business owner is left with two options to deal with the debts; either try to save the business while trying to clear the outstanding debts by digging into their own pockets or allow the business to fail, but with an exit strategy that minimizes the financial consequences.

How to deal with your small business debts

Reduce costs

If you are not in a position to redeem your small business with private finances, you need to identify areas where you can cut costs. Do one project at a time. Don’t be in a hurry to acquire multiple funding for your various projects. Ensure that you work on one at a time and see its success. You can now go on to the next one. Perhaps, you can also lease out part of your working space and earn extra cash out of it.

Consolidate loans

Consolidating your small business loans into one single payment may reduce your monthly costs without having to affect your credit negatively. Consolidated loans allow you to deal with one creditor and probably get a loan with lower interests. There are debt consolidation companies that you can hire to negotiate the loan, gather payments from your business, and pay off previous creditors.

Stay in touch with customers and suppliers

It is crucial to keep on toes with your customers. This will help you create a good relationship with them and they will end up connecting you to more clients. This will increase your business exposure thus adding up to your earned revenue. Consider offering discounts to your suppliers too.

Always stay connected to your creditors

It is common even for individuals to go silent when they owe someone money when they are not in a position to clear it. This however can bring more harm and make matters worse. Reach out to your lenders. Request them to work with you to lower the interest rates, increase your credit period or revisit your repayment terms.