Running your business can be expensive – especially if you’ve just started on this exciting venture. There are upfront costs you need to consider, such as property rental, equipment, or even marketing. These can build up and, if your company isn’t making enough money, then you can find the debts spiralling out of your control.
If this sounds like you and your brand, don’t panic: there are ways that you can turn things around and reduce the debt that you owe, from working with Insolvency Practitioners to reducing business expenses. Here are some tips on how you can manage situations such as these.
Work with an Insolvency Practitioner
A poll has suggested that two out of five businesses have been saved by insolvency services. If you’re at a point where you are struggling to pay your employees and tax, then you may want to get help from Insolvency Practitioners. Working with an insolvency practitioner can help you to get on top of your debt and avoid losing your business. There are several services offered by insolvency practitioners, and they can advise on company liquidations, Creditors Voluntary Liquidation (CVLs) administrations, and bankruptcy.
List the debts you owe
The best way to deal with debt is to acknowledge it. To do that, you should confirm all of the debts that you currently have – put them on a list. You may need to have your credit report to hand, as well as your bank statements.
Use a spreadsheet to list each debt item. You can then include other details on the page, such as the interest rate, minimum monthly payment, full balance owed and due dates. This might seem alarming, but it is the only way you can look at it. Remember, just one late payment can affect your credit score.
Have a plan
Once you know what’s due and by when you can make a plan on how to pay. You can do this as easily as setting up automatic payments from a dedicated account. Alternatively, you can have a calendar that lists when each payment is due and how you will pay it.
When you have surplus capital, make sure that you pay as much of your debts as possible. You should always try to pay more than the minimum amount – the longer you are paying high-interest rate balances, the longer it’ll be until you can grow your business.
Reduce your business expenses
Have a look at your operating costs and identify which expenses you can cut out, compared to the ones you need for operating your business daily. These can be subscriptions or memberships, for instance, which you could stop or temporarily suspend until you are more financially stable.
If you rent a property for your business, see if you can either sub-let any spare space that you don’t use or move to smaller premises – this will reduce your monthly rent. You might be able to negotiate with some vendors to get a reduced rate or even a flat rate.