A lot of small business owners depend on their personal savings and credit cards to fund their entrepreneurial exploits. However, their energy and enthusiasm which have helped them to float a business venture of their own might turn out to be one of the major reasons for stress and despair, especially if there’s an intermittent supply of cash and debt spiralling.
If you’re one such entrepreneur, then both your business as well as personal credit may be at risk since you’d be trapped in business and consumer debt all at the same time. To get rid of your business and personal financial woes, you need to choose a two-pronged strategy through which you can achieve your set goals.
Deal with your personal debts
You’ll have to assess your debt situation and decide which loan you need to pay off first. Make a list of all your outstanding balances, including the most pressing ones. After that, you may follow the below mentioned steps:
- Include the overall amount due of debts like credit cards, payday loans, installment loans, etc with their respective interest rates and their repayment deadlines.
- Prioritize them in accordance to the size of the balances due or those with the higher rate of interest, or the ones that are sorely overdue.
- Organize all your debts into two slots – personal and business.
- Having everything in writing will set you up for planned monthly payments and to negotiate well with your creditors.
Deal with your business debts
Once you’ve figured out everything regarding your personal debts, its time for you to trade your guns towards the business loans:
- Assess your business debts as well as your business with your head and not your heart.
- Conduct a study to find out your most profitable products and services, and discard those that aren’t bringing in any revenue for your company.
- Next, analyze your employees’ performance to check and see if you’d have to make any sort of adjustment, seriously! The life of your business depends on productive people, particularly if you have a very limited number of staff. So, discard those who are sitting inert in your company.
- After that, you need to research the market for new vendors and negotiate costs with your present ones.
- Look for additional discounts on overhead expenditures.
- Postpone all plans for any new merger and acquisition unless you are sure that such an initiative would boost your company’s revenue.
- Get your employees trained to perform additional tasks or ask them to participate into activities that would promote the business. Throw in some rewards to make it all the more appealing to them.
Deal with your creditors
Open a line of communication with your creditors. This would build trust and credibility into your case and you’ll get a better podium to make your plight heard. You may start with the following:
- Get your credit cards consolidated and when you’ve paid them off, just cut those plastics into two halves.
- Negotiate with the creditors and never give up till you’ve spoken to a manager or a staff of the customer retention department.
- Get your family members on board and explain them your financial condition, if you owe them any money. If needed, then you may have one of your employee replaced with that of your family members.
- Follow the same with your creditors. You may pledge a percentage of the business profits with them for that matter.
- Finally, contact your local Small Business Administration office for appropriate help and counseling.
Last but not the least, do not give up. At the end of the day, its your conviction and best thinking that would be crucial to salvage your sinking business.