Your business is only successful if your income is substantially greater than your debt. The more you owe, the less profit you make and the less chance your business will thrive. Operating in the red is a sure route to financial disaster.
Peter Comisar encourages business owners to get out of debt as quickly as possible for a sound financial future. Here are some ways to reduce your business debts.
Be Aware of Your Finances
The most crucial aspect of running any business is staying on top of finances. Consult your books on a daily basis. Keep track of your expenses and your sources of income to make sure your income is greater than your costs. If costs are high, get tough and find ways to make your business profitable. It may require laying off employees or cutting back in other areas. You need to take action before the situation becomes a crisis. The only way you’ll know when it’s time to act is if you’re aware of your financial situation.
Find a Balance
While you want to cut costs, you don’t want to cut corners and provide a poor product or service to your customers. Instead, think about wise ways to reduce the waste in your business. Ask your suppliers for discounts instead or consider renting out less space for your business.
Increase Your Income
Increase your revenue by placing products or services on sale. Communicate with your customers and do surveys so you can find ways to improve your business. Happy customers will provide you with referrals and greater streams of income.
Get Better Terms for Your Loans
If your debts are overwhelming, talk to your lending institution and explain the situation. Creditors are willing to work with you if they know you are making a good-faith effort toward paying back what you owe.
Consolidate Your Loans
If you have a number of debts, it might be to your benefit to consolidate those loans into one manageable payment. Look for a lower interest rate so more of your money is going toward the principal, enabling you to pay off that debt faster. Make sure you understand all of the terms of that loan and remember that the goal is to reduce the amount you’re paying each month. Seek advice from your accountant before undertaking a consolidation.
Follow these tips and you’ll be debt-free and running a profitable business in no time.