Debt affects more people than you know. From the biggest and most successful chains to the small mom ‘n’ pop store on the corner, no one is completely free from its clutches — in fact, it’s quite common and only becomes a problem if it gets out of hand. Since debt can originate in a multitude of ways, there are a multitude of ways you can get yourself out of the red; the following three steps will help you manage your debts in a productive and positive way.
Take Inventory Of Your Debt
Before you go making any major changes, you need to figure out exactly what you owe and why. Begin by sorting all of your debts by interest rate and monthly payment; this includes payments on business loans, lines of credit, and business credit cards, as well as outstanding payments due to vendors.
This process can help you prioritize your situation and focus on the biggest problems first, which is often the highest-interest-rate debt. As a small business owner, you should try to have all of your debt repaid within your first year to lower the risk of bankruptcy.
Now that you have a debt management plan, you can focus on building up the one thing that’s always needed to become debt-free: capital. The following ideas can help push your revenue from sales even farther.
- Reward loyal customers: Loyalty programs are a boon for companies. Not only do they increase customer satisfaction and retention, but they encourage consumers to shop. It may sound simple, but it can make a huge difference in the number of sales you make long-term.
- Become active on social media: In order to reach your consumers, you have to go where they are. Considering the fact that approximately one billion people use Facebook throughout the world, and 100 million people visit Instagram each month, social media is not a bad place to start. The more you engage with your customers on platforms they’re comfortable and familiar with, the more they’ll trust in your brand.
- Look into field service management systems: If your company relies on fieldwork to perform its jobs, field service management software is a must. Businesses have reported increasing the number of customers they’ve won by 90% thanks to FSM software; not only can you pay more attention to your customers (thereby fixing their problems faster), you can also see more customers each day.
Refinance High-Cost Debt
Finally, you’ll want to look into refinancing. The process allows you to take out a lower-interest loan in order to repay the original loan; if you consolidate, you’ll be able to combine several loans into one. Credit card debt can also be refinanced. Maxed-out credit cards (at 100% utilization) can seriously damage your credit score, so transferring that debt to a new card that has a 0% interest promo period can help you avoid the consequences of interest while still helping you pay down that debt.
Facing debt as a small business is a terrifying prospect, but it doesn’t have to be the end of your company. Even though 82% of businesses that fail do so because of cash flow problems, as long as you make the necessary changes and are smart about making decisions in the future, you’ll be able to get out and stay out of the red.