When profits are falling because of the costs of repaying back a debt, it leaves a company asking themselves two questions, “Do we stop the debt and risk disaster in the short term or do we let the business keep eating away at the profits until they are all gone?”
Borrowing money to pay off a debt shouldn’t be an option because it only makes matters worse for you in the long run. It is the number one reason why most businesses continue to be in debt. Borrowing from Paul to pay Mary only leaves you needing to pay Paul.
It requires a little work, but you can payback debt in a healthy way by following these 3 principles:
- Negotiate your debt: These vendors want their money and may be open to your requests, saving both time and stress. Request to make arrangements for lower interest rates, request a longer repayment plan, ask to consolidate your debt to reduce your monthly payment. What they are willing to accept as a settlement? If your request is denied, ask to speak with a supervisor.
- Sales are not profit: Increasing your sales is a good way to generate more income but know that sales are not profit. Sales will boost your bottom line when your costs are low and your margins are high.
- Cutting your costs: Looking at your numbers can save a company a lot of money. There are always costs you can cut. Would increasing your minimums decrease your overall cost? Are there things you can buy in bulk that you buy every month? If you work with company “x”can you negotiate a better deal for “y”.
Dive in and be prepared to be amazed at how fast you can overcome your business debt.
To Your Success,