First Class Business

Actual Business Ideas

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With many lenders tightening the belt on borrowers and the cost of goods and services on the rise, many small business owners are finding themselves under a growing pile of debt. Although many businesses in this situation file for bankruptcy, there are other options businesses can try in order to dig their way out of debt and into financial freedom:

  1. Cut Unnecessary Costs

In order to make headway in your debt, identify the parts of the business that brought debt into the company in the first place. These are the areas that should be dealt with first. Once these areas are free from debt, it is vital to reevaluate the way these areas are run in order to avoid falling into debt once again.

Next, consider cutting back on business expenses you can do without such as a costly phone system, office equipment you don’t need, or an expensive office space when a smaller, less expensive space will do just fine.

  1. Revisit the Budget

Many startup companies stick to a strict budget, but once the business begins to take off, the budget goes out the window. If your business is in serious trouble, take a look at the budget. Begin by creating a new budget based on your business’s current financial situation. Your business’s revenues should cover at least rent and utilities. From there, allot a portion of the budget to variable costs, like manufactured goods and services. Lastly, if your business has relied on credit cards, now is the time to pay down those outstanding credit balances. Consider using a balance transfer credit card in order to attack the debt head-on. Jeffry Weber of SmartBalanceTransfers.com states, “Using a balance transfer credit card allows for small and large businesses alike to regain control of their finances and find financial stability once again.”

  1. Prioritize Debt Payments

One of the best ways to pay down debt is to pay off the highest-interest rate debt first. High interest rates accumulate debt quicker, for the monthly or annual interest rate can tack on thousands of extra dollars. If you can eliminate these debts from your businesses as soon as possible, you will save your business money in the long run.

  1. Speak with Creditors

Often creditors are willing to work with your financial situation. Ask creditors if they have a hardship plan that may offer a better or a more feasible payment plan. Or, request a more feasible payment plan or a reduced settlement amount if the creditor does not offer a better payment plan.

  1. Consolidate Loans

If you can consolidate your loans into one payment, you will reduce your monthly costs without hurting your credit. Look to consolidate short-term loans into one long-term payment plan.

  1. Seek Counsel

Credit counselors and financial counselors offer unprecedented advice that can significantly change the fate of your business. They can provide you with options that can relieve you of your debt quicker than if you attempted it at your own pace.

Seek out practical ways to eliminate debt from your business in order to avoid filing for bankruptcy.


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