Small Changes to Help You Manage Business Debt

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Businesses have to incur debt. That is a fact that you cannot change. However, when your debt outweighs your incoming funds, that can leave you scrambling to keep the doors open. Here, Grand Gents offers tips on how to climb out of the darkest depths of debt without overhauling your entire operation.

Get Help If You Need It

One of the first steps to understanding your problems is to admit where you need assistance. Not all of us feel like we are great with numbers, taxes, or money in general. Don’t be shy about bringing in an extra set of eyes to help you with any of these areas. A bookkeeper, accountant, or purchasing manager can all help.

Revise Your Business Structure

Your business structure might refer to your hierarchical management chart or your legal business entity. For the former, changing to a different management structure might make it easier to keep tabs on your expenditures. For the latter, revising your company to an LLC status might help you pay less in taxes. However, forming an LLC in Oklahoma does come with some expenses, which you can lessen by using a formation service.

Cut Employee Hours

You need employees, but do you need them on the clock for 40 hours per week? If you’re a small business, chances are good that you do not. Take a look at your employee roster and match that up to hours they work where they might not be needed. Most workers won’t be highly upset if you cut three or four hours off of their workweek temporarily. If you want to dig even deeper, you might even change the hours of employees that you consider unproductive. Canada’s Liberty Staffing explains that these are the individuals that make excuses, complain, and procrastinate.

Add Employees

You also want to look at the possibility that you are not making enough money to cover your debt simply because you don’t have the manpower. If you’re turning down jobs, experiencing delayed customer service, or your best staff is working at entry-level because there simply is no one to cover menial tasks, it might be time to post a listing on several job boards.

Learn to Budget

Budgeting is the process of watching where your dollars come from and where they go. Take the time to actually learn about all the aspects of managing your company’s money. This should include reading financial reports, such as your aging and accounts receivable. You can take a class online to improve your financial knowledge. In turn, you’ll be a better business owner and will be able to lay a solid foundation for the future.

Create New Revenue Streams

If your company is overall stable, it might be wise to add new revenue streams so that you can pay off debt sooner. This involves looking at your current lineup of products and services and then looking for ways you can maximize profits from each. For example, if you own a home services company, you might offer a monthly service contract, which, for a small fee, will give your customers priority and complimentary services.

Consolidate High-Interest Debt

Take a look at the debt you have outstanding. It makes the most sense to have one large payment each month instead of several small ones with different interest rates. Consolidating your debt into one payment also means you’ll avoid pesky late charges on accounts you forget to pay because you’re overwhelmed.

There are many components that go into running a business, and managing your debt is one of them. You don’t have to do it alone, and there are many professionals that you can bring in to lend a helping hand. There are also small steps you can take, like taking an accounting course and cutting back on employee hours, that will make a big difference in your bottom line.

 Article written by Derek Goodman