There is nothing worse than being crushed by debt from bad business decisions. It can happen to anyone and there is no time to despair once you fall in that trap and thoughts of going bankrupt start troubling you.
No matter how decimating it must be to earn money and have to give it to someone else, you have to take measures to erase and mitigate the situation. Knowing these five simple steps is all you need to gain control of your financial situation and resurrect your business.
Reassess your budget
Most business-related debts are due to bad budget management. Reassessing your budget is the first step towards a clean credit score. You have to find out which parts of your business are the most inefficient. Do you have too many employees? Are you using the right automated tools for simple processes? Are there any products that aren’t selling well?
All of these questions need to be addressed. Talk to your accountant and let them help you create a new budget plan. Saving money where it counts will make it easier to pay off your debt as quickly as possible, with little to no consequences for your private life.
Consider an IVA
IVA (Individual Voluntary Agreement) is a form of a debt solution that allows business owners to consolidate all their debts and make payments on a monthly basis.
Instead of being scared by property and financial forfeiture, you can pay in smaller rates to any Insolvency Practitioner (IP). The IVA is one of the best methods for eradicating large debts.
Perhaps the biggest benefit of this method is that you get to keep your business and property, all while continuing to grow your venture. If you apply the aforementioned tips, you will gradually pay off rates with increasing ease. Every IVA candidate has to consolidate the monthly amount with the IP, in agreement with the creditors that the money is being owed to.
The upper limit for IVA completion is 60 months. You can pay off your debts even faster if you are willing to consolidate your expenditure and take control of your credit score. The best part about an IVA? Creditors can’t contact you or take any action against you.
Reduce expenses
Every entrepreneur had a plan that failed for one reason or another. What made them successful in the end is immediate action when it comes to reducing expenses. The first thing you should do is decide which services and operations aren’t necessary.
Go even deeper. See if you have any subscriptions and tools you use rarely or never. An equally good idea would be to renegotiate payment options and prices with suppliers. Every little thing matters and accelerates you escaping indebtedness.
Pay with cash
If you or your employees are using company credit cards, it’s an unnecessary risk. Instead of constantly stressing out about how you’re going to pay off purchases, you should switch to cash. Using only bills urges you to purchase only what you need.
Perhaps the most essential part when looking to eliminate debt is avoiding to create new debts. If you make this approach a pillar of your debt eradication goals, you will have a lot more money to pay debts on a monthly basis.
Look for a new method of income
To speed up the debt repayment plan, you can always diversify and expand into new niches. Be careful at this stage, as any overly ambitious project can have calamitous consequences for your business and personal finances.
Look into some modern marketing tactics for quick profit increases, as you will need both short-term and long-term financial boosts. Improve the experience and make sure the customer service is premium. All of this contributes to freedom from debt.