It is normal to get into debt and even miss making a payment on time. Over 14% of all small- and medium-sized enterprises (SMEs) have business debts ranging from 50,000 to 100,000. And just 21% of SMEs report not having no debt obligation.
AT&T leads with over 147 billion in debt among big businesses in the US, with Ford Motor Company coming in second with $114 billion.
Therefore, as long as you still have the means to meet your debt obligations through proper planning, you should not despair. And debt consolidation services can help you repay your debts.
What would help is you taking drastic action to stop your business from collapsing under heavy debt and penalties.
How to Overcome Debt in Business with Debt Consolidation
The first step is to get help from debt consolidation loan providers like Social Finance. They will help you negotiate your current debt repayment plans and consolidate your debts into a single manageable payment.
You will then be able to manage your debts with relative ease from there henceforth. Read on to find out how you can get out of debt faster and escape failure.
Find out Why You are Failing
In most businesses, you will find that the 80/20 Pareto rule applies to your efforts and returns. The rule states that roughly 80 percent of the effects are caused by 20 percent of the causes.
You can discover why your business is failing by finding out which of your operations or efforts are bringing you 80% of your income. You can then focus on those operations that bring you most of your income.
Reorganize Your Operations
You can concentrate on 20% of your current business operations that give you 80% income, to free yourself of unnecessary expenses. As for the 80% that only accounts for 20% of your income, you can outsource it or drop it altogether.
Even though the 80% of your business operations that account for 20% of income may seem essential, they serve no critical purpose in your business’s existence. Therefore, it is best to focus on what is bringing you 80% of your current income.
Cut Down Your Expenses
Most businesses get into debt because they do not want to cut down on specific aspects of their operations. That could be because they do not want to appear as making losses, or they feel that things are going to improve soon.
However, that approach can lead to bankruptcy. The rule of thumb is to make sure that every dollar spent running the business gets its rightful percentage of ROI. At a minimum, you should get at least 3 dollars in return for every dollar you spend.
Collect Your Debts
If some of your debtors are not paying on time, you need to double your debt collection efforts and change your debt terms. The longer they retain what they owe you, the more your business will suffer from a low cash flow.
Remember that you incur penalties when you do not pay your credit card debt or loan on time. On top of the late payment fees, the credit card company may revise the rates upward.
While you cannot do the same with your debtors, you can collect as much as they can pay at any given time.
Learn From Your Mistakes
When you fall behind in repaying your debt, do not let that discourage you from trying to find new business. Instead, treat your debt as a challenge that inspires you to become a better manager and entrepreneur.
Focus on finding new business opportunities that can help you offset your current debts. At the same time, get rid of expenses that are not helping your business generate meaningful returns.
Conclusion – How to Overcome Debt in Business
You will find that when you focus on sound business management practices, rather than worrying about your debt, your business will start to grow again.
If the debt is about to overwhelm you, contact a debt consolidation service and let them help you to restructure your debt.
Most importantly, focus on marketing your services, and brand your business as a successful enterprise.