Fired with boundless ambition and dreams of making it big, there are countless entrepreneurs who kick off business ventures, only to be faced with the harsh realities of the marketplace, and increasing pressure on finances. If this seems to be a familiar story, then here’s what you should consider doing to keep alive your entrepreneurial dreams.
Figure Out Your Financial Status
The first thing entrepreneurs who are faced with a huge amount of business debt should do is to figure out what their income streams and expenses of running the business are. Also make a detailed list of all the debts that have been taken along with the amounts outstanding and the rate of interest applicable. If this seems to be a daunting task, engage a qualified accountant to assist you in making a financial statement that reflects reality. This statement should ideally also contain details of penalties that have become applicable on your debts if you have missed out on the regular payments as per the repayment schedule, and amount receivable from customers.
Cut Down On Expenses
The financial statement will also reveal what the direct costs of doing business are and what expenses are being incurred on the overheads. This is especially important as while you need to keep on buying the raw materials and other essential inputs, as well as pay salaries, you can certainly tighten your belt on overheads such as entertainment, travel and tours, or even fancy lunches. It is quite likely that the savings you can manage could be substantial enough to be ploughed into servicing your debt. A frank talk with your staff could find them willing to chip in with more cost cuts to ensure the survival of the business. Find out if you have unused space that can be let out or even sold, or excess manufacturing capacity that can be used to taken on work on behalf of others. Firing employees should be the last resort but may need to be done if completely unavoidable.
Connect With Creditors, Customers, and Suppliers
When the business is in trouble, the last thing you would want to do is to keep it hidden from the people who have important stakes in its existence. You should attempt to explain things rationally and truthfully to your creditors and request them to cooperate with you to tide over the bad times by lowering the interest rate, waiving off penalties, and even increasing your line of credit so that your business can bounce back sooner. Ask your suppliers for better terms and pricing and request deferment of the payments. Discuss with your large customers, your predicament and offer discounts for advance payments or less credit to improve your cash flows.
Consolidate Your Debts
If you find yourself getting bogged down dealing incessantly with multiple creditors or are being harassed by collection agencies,you may not be able to devote enough time to get your business back on track.You could think about consolidating all your debts with the help of a professional debt consolidation agency. To find a reputed debt consolidation agency you should search online and also peruse in detail the various debt reviews that are available. These companies will consolidate all your outstanding loans into one or two fast business loans that is larger. The advantage is that you now do not have to deal with multiple creditors but just need to pay the amount payable per month to the consolidating agency. When you take a debt consolidation loan that in effect can pay off all your creditors, you can request for a tenure that is longer than the original ones so that you can pay off your monthly dues over a longer period of time. A professional debt consolidation company will also try to renegotiate the terms with your creditors and be able to get substantial sums knocked off the interest and even from the principal.