Accounting & Finance
Easy Ways For Entrepreneurs To Pay Off Business Debts Quickly
As a nascent entrepreneur, you know that in order to make money sustainably you need to master the fine balancing act between spending and saving. While overhead costs are inevitable in any business, it’s up to you to find creative ways to mitigate them without impinging on the function or quality of service that your business offers. Thus, overheads need to be carefully managed, while unnecessary expenditure that doesn’t produce a healthy return on your investment must be scythed down. You also know, however that judicious spending can make or break your business. The right purchases can aid productivity, boost sales, increase your time efficiency, boost employee morale and lead to a whole range of other factors that will help your business to grow in sustainable ways.
The key, then, lies in finding ways of curbing unnecessary spending while freeing up enough liquid assets to be able to move on potentially lucrative opportunities and and when they develop. To do this, however, businesses need to ensure that their debts are paid promptly. In other words…
It’s all about cash flow
A business’ liquidity (or lack thereof) can be its success or undoing. The healthy flow of cash can allow you to pick up that super great value bundle of stock, hire that promising new employee, buy that more efficient equipment or move to that better located premises with better foot traffic and a greater market share. The trouble is that businesses (even those with comparatively few overheads like online startups) have expenses coming at them from all sides. They have to pay employees promptly, ensure suppliers are paid on time, repay any loans they incurred as part of their startup costs as well as the rental on the premises, insurance and various utilities and communications costs that come with running a business. That’s a lot of plates to spin! If entrepreneurs aren’t careful, if just one of these plates slips and comes crashing to the ground, the delicate machinery of your business’ finances could well come shuddering to a halt. Thus, it’s of vital importance that businesses pay off their debts quickly to keep a healthy cash flow and ensure their business is ripe with opportunities for growth without being stunted by the quagmire of debt.
Here are some ways you can pay your debts promptly, no matter what the nature of your business…
Use an Instant Approval Credit Card
Need credit instantly? Not just this month, not just this week, but today and right now? You may think that a credit card can’t help you, but you’d be wrong. There are lots of instant approval bank cards on the market that can be a valuable lifeline if you have an urgent debt that needs to be cleared quickly. While you may need to wait a day to two for the physical card the credit card number is issued at point of approval and can be used to clear debts in a matter of minutes. So long as you factor the repayments (including interest) into your usual monthly expenditure, there’s no reason why you can’t lean on credit cards to dig yourself out of a debt hole.
Maintain open lines of communication with your creditors
Your creditors are not mustache twirling profiteers, trying to drain the life out of your enterprise. They’re businesses, just like yours, and they are usually amenable to working with their debtors to ensure a mutually acceptable outcome. If your current repayment schedule is demanding in a time of slow business or reduced custom and the repayments are impinging on your cash flow, it may be worth contacting your creditors to see if an arrangement can be reached whereby you reduce your monthly repayments. This may involve a slightly higher rate of interest and / or a prolonging of the debt, but if a few months of healthy trading will help you right the ship, it may be the perfect way to navigate a dry spell.
Revisit your business budget
Entrepreneurs are usually so embroiled with the operational aspects of their business, it’s not in their nature to take a step back and look at their business from a more macro perspective. Set aside some time to revisit your business budget (or establish one in the first place). Take a good look at your monthly outgoings and try to find ways of freeing up cash by making cuts (if only temporarily). Remember that making cuts across the board may free up capital in the short term but will likely impede long term growth (which is why the UK’s policy of austerity is leading to the slowest period of post-crisis recovery in the developed world), so look for the areas of spending with the lowest fiscal multipliers and cut where you can.
Find ways to increase revenue
As well as addressing the problem of debt, it’s also important to address the cause of the problem which is almost always a lack of revenue. This could be because of a seasonal slump, a lack of sales or a failure of marketing. Whatever the reason, it’s essential to find ways of increasing your revenue if you’re to pay off your business debts quickly now and in the future.
You likely guard the profit margins on each and every item of stock in your inventory, but while this is admirable, stock won’t generate any profit whatsoever if it sits untouched on the shelf. While many retailers and other businesses tend to let the passing of the seasons or external industry factors dictate when they throw sales, there’s never a bad time to throw a sale to get more people through the door and shift some units of stock. You may not generate as much profit, but you’ll generate business. Impress these new customers and they’ll keep coming back to you, even when you return your prices to their usual rates.
You should also incentivize customer referrals. If it’s good enough to help Uber launch one of the most successful business models in recent history, it’s good enough for you. Giving your loyal customers a discount for referring friends, family and colleagues to your business is always worth the initial dip in profits as it leads to a broader customer base.