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How Entrepreneurs Can Get Their Businesses Out of Debt

Debt is an unavoidable part of having a small business and one you’re probably already familiar with. After all, you likely had your finances evaluated as part of securing a loan. Taking out loans and opening lines of credit is necessary to acquire the things you need to keep your business running and growing. However, too much debt can put a strain on your incoming revenue, putting your business at risk of going broke. Poor financial management is a common cause of small business failure. But there are methods for pulling back from the brink of bankruptcy.

If you’re trying to get out of debt to secure your business’s financial health and future, you can start with the following tips from Pristine Advisers.

Review Your Budget

If you haven’t been monitoring your budget—or don’t have one—it’s time to look over your last few months’ credit card and bank statements. These items should provide enough information to give you a basic idea of what’s coming in and what’s being spent. Take an audit of all your revenue sources and expenses, identifying expense patterns and categorizing them by expense type and revenue source. This will help you understand where your business is most profitable and where you may be losing money.

Once you’ve been able to create a budget, you’ll need to monitor it to ensure you don’t continue to overspend and to keep an eye on things that need improvement. This is where financial tools come in handy. You can do faster invoicing with batch automation software. These tools can generate reports sorted into categories, allowing you to easily monitor and stay on top of your budget and be prepared come tax time.

Something else to bear in mind: given how difficult budgeting can be, some experience in accounting can be extremely helpful. You could even consider going back to school for a degree, preferably through an online program whose flexibility will allow you to learn at your own pace without having to take time off work.

Start Boosting Sales

Once you’ve got your budget under control, the next step to getting out of any kind of debt is to make more money. That means boosting sales so you can pay off your debt faster and ensure that you can stay in business. Keep in mind that boosting sales doesn’t mean selling your products or services at a discounted price. It means getting creative with your recurring customers and reaching new ones.

Here are a few things you can try:

• Create a rewards program for loyal customers. Roughly 82% of consumers said they were more likely to start shopping or shop regularly with a company that offers a loyalty program.
• Raise your prices. Raising your prices isn’t something to be afraid of, especially if you do it the right way. For example, when you raise your prices you can also offer high-volume discounts, which will give you a competitive edge.
• Be more active online. 84% of all consumers trust online reviews as much as they would trust a friend or family member’s recommendation. So, engage with your customer base on social media, Google, Yelp, and any other platform where people can post a review, ask a question, and comment on your products or services.

Cut Costs

If your expenses are still running a little too high, you’re going to need to start cutting costs. Review your expenses and budget again and see what your business can survive without. For example, sell off equipment and office supplies that don’t see much action, consider downsizing to a smaller space that costs less in rent and utilities, and so on. You may also want to go through your list of vendors and see if you can renegotiate or terminate any contracts.

Think About Refinancing

If you have high-interest debts that are making it difficult to repay your debts, you may want to think about either refinancing your existing loans or debt consolidation. By refinancing, you would be taking out a lower-interest loan to repay the original, and with debt consolidation, you’d be combining several loans into one so you can make one payment each month. The option that’s right for you will entirely depend on your credit score and history.

Any business can get into debt. Getting out of debt is harder, but it’s possible. By following these tips, you greatly improve your company’s financial forecast.

Pristine Advisers is an award-winning firm that has built a reputation for Financial Advisory Firms, providing them high-end experience in the IR, PR and Media Relation field. Call (631)756-2486.