It’s not uncommon to be a growing business with loads of debt sitting on your shoulders. However, you can’t let that weight keep you down – if you manage your debt properly you can still grow and expand without going over a strict budget or declaring bankruptcy.
While the web is plastered with any number of debt management tutorials and articles, there are three main factors to consider: writing a plan, getting ready to grow, and prioritizing the rest.
Write Your Forecast
Before you can consider any sort of debt management process, you have to have a forecast written out. While you can call this a plan, it’s better qualified as a forecast, as it’s more important that you have a plan of where you want to be, as opposed to what you want to do; how you want to tackle your debt may change, but where you want to end up should remain steady. There are two main aspects in this forecast.
- What you have now: What debt are you in; how much, with whom, etc.
- What you’ll have: Where do you want to be in “x” amount of months or years. With a rigid deadline and schedule you can stay on task.
Consider Your Office Options
As a growing business, you need the right equipment to house new employees, take care of clients, etc. However, purchasing an office space and then furnishing it may be out of the question. Still, as a necessary evil of your growing business, you’ll need to make it work without breaking the bank or increasing your existing debt. Consider:
- Leasing: Leasing equipment is a cheap way to get what you need right away without dealing with applications, credit scores or large payments.
- Virtual: The beauty of the internet? You don’t need an office to work and connect. Hire remote employees and save on office space, furniture, and a number of other overhead costs.
Prioritize Your Debt
Your final debt management tactic is prioritizing your obligations. Though you may have a handful of small loans here and there, it’s important that you pay them off in a way that will save you money in the end. Nolo.com suggests, “Paying certain bills and debts is vital to protecting your business — and your personal assets.” There are two important options for prioritizing.
- Consequences: Some debts have substantial consequences if not paid. The worst of which is irreparable credit damage, jail or repossession. Be sure to speak with creditors at your financial institutions before prioritizing.
- Interest: Any financial expert will tell you – pay off the loans with the highest interest. If you are still having trouble, consider paying it off with a lower interest loan or consolidating.
Managing your small business debt is critical to moving your business in the right direction. While there are options for managing it now, you may be gaining new debts as you grow, and getting rid of as many as possible now is critical. Start with your forecast, get your business where it needs to be, and then get them prioritized to save the most on interest.
Bio: Jessica Sanders is an avid small business writer touching on topics that range from incorporation and social media to office furniture. She is a professional blogger and web content writer for ResourceNation.com.
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