Not all entrepreneurs have backgrounds in financial management, and that’s just fine. It takes a broad skill set to get a new business off the ground. However, financial mismanagement during the first year of starting a new business can set the company up for failure.
Small business owners almost always need to take out loans or business lines of credit to get everything up and running. The key to Small Business finance is to get those debts back under control as quickly as possible. Read on to find some tips for how to pay off debts fast.
Know Where the Company Stands
It’s impossible to get out of debt if business owners don’t know where their companies stand in regards to vendor payments, credit lines, and loans. The first step for anyone who’s been having trouble managing a small business from the financial perspective is to stop and take inventory.
Start by making a list of all the company’s outstanding loans and bills. Include information about the lender or vendor, the amount of the loan or outstanding payment, and the interest rate. Experts suggest paying off high-interest-rate loans and credit lines first before paying down more-affordable debt.
Make a Plan for Increasing Sales
Every small business owner’s goal should be to increase sales as quickly as possible. There are plenty of ways for struggling stores to attract new customers and keep current ones loyal to the brand. Creating new marketing campaigns or customer loyalty programs and offering volume discounts can go a long way towards attracting new customers and generating a loyal fan base for a company that’s just getting off the ground.
Don’t be afraid to invest in affordable digital marketing services, especially if the company’s website isn’t performing up to expectations. Services like web design, search engine optimization, and social media marketing can all provide an excellent return on investment.
Cut Costs Wherever Possible
Small business owners may need to get creative when it comes to cutting costs while they wait for their marketing plans to pay off. Think about downsizing to a smaller office, selling expensive equipment that doesn’t get used very often, or even splitting costs with other businesses that also need a leg up.
Reevaluate Payment Terms
Offering long-term payment plans to valuable customers or clients is a great way to boost sales, but it can make it harder to pay down debts in the meantime. Implement late-payment penalties for customers who don’t stay on top of paying down their own debts and consider either shortening the payment terms for new clients or offering early payment discounts to encourage them to pay down their debts faster.
The Bottom Line
Running a small business is hard, and getting a company off the ground almost always requires taking on some form of debt. Business owners who have found themselves in over their heads have plenty of options, though. Try implementing the tips above to start getting the company’s finances back on track.