Whether you’re $10,000, $100,000, or more in debt, business debt can be overwhelming. As the leader of your company, it’s up to you to assess your business and create a plan that will empower you to become debt-free. While this may seem challenging, there are steps you can take and strategies you can implement that will improve your debt-to-income ratio and pull your business out of the red.
Write It All Down
Before you can begin the process of solving your debt issues, you need to know precisely how much debt you have. That’s why we suggest writing everything down, creating a spreadsheet that lists your debt, monthly expenses, tax bills, and any other personal and professional costs. This can be a challenge, especially if the reason for your debt was an understaffed (or nonexistent, if you’re a small business) accounting department, but it’s important to create a thorough list.
While you’re making this list, be sure to include interest rates and minimum payments. This can help you better assess what to pay off first.
Consolidate or Refinance
After you’ve created your comprehensive list of debts, your next step may be to look at debt consolidation or refinancing. This can be especially helpful if you have multiple high-interest loans or credit cards that you need to pay off.
Consolidating your debt combines several smaller loans into a larger loan, potentially allowing you to make a lower monthly payment. You can also choose to refinance your debt by taking out a larger, lower-interest loan and using it to pay off higher-interest debts, lowering your overall payments.
Create a Solid Business Plan
Once you’ve assessed your debts and created a plan for dealing with your payments, a solid business plan to increase your profits can help you stick to your repayment. Consider cutting costs by selling off equipment you don’t use much, moving to a smaller office, or working with another small company to share operations costs.
Whether you’re selling services or products, a loyalty program can work wonders for customer retention. Rewarding loyal customers makes them 82% more likely to shop at your store again. It also means they’ll talk about you in a positive light, and that means free publicity.
If you’re not active on social media, now would be a good time to get active! People turn to social media and online reviews to decide whether a company will work for them; if you’re not active, you’re missing a huge chunk of consumers.
Take Advantage of Debt Relief Programs
Some of your debt may come from unpaid back taxes. If that’s the case, the IRS may be able to help. They offer several programs for tax debt forgiveness and relief that can help reduce or even eliminate the amount of tax debt you owe. However, if you’re struggling with tax debt, you should take advantage of available professional help. Working with someone who understands the IRS and debt relief programs can help you get the best possible outcome for your situation.