While some believe incurring debt is a natural part of business in Australia, outside obligations can hinder the growth of your business greatly. Granted, a great business loan can help fund your start-up or carry you through lean times. However, paying out your earnings every month to multiple financial institutions can end up costing you more over time.
With each obligation, you not only have to repay your initial obligations, but you are paying charges on the interest as well, sometimes excessively so. If the rates are anything beyond zero percent, that money you hand over to the financing company is money not reinvested in your own project. This is not a perfect world, though, and sometimes, outside obligations can form a major maelstrom in our financial sector.
Let’s take a look at a few helpful tips to help you regain control of your business debt.
Debt consolidation is probably the most practical way to remove excessive debt. In addition to other financing companies, Latitude offer debt consolidation loans to Australian business owners grappling with trying to control multiple obligations. The great advantage of consolidating your debt is reducing the amount of money you are paying out in interest every month. Furthermore, often these loan programs reduce your payment, so as opposed to paying out three, even four, payments that add up, you pay one payment, which is typically much lower.
Use the ‘Stack Method’
The stack method involves a series of steps that help you, the business owner, gain control of your debt, but also help you eliminate debt as well. Major tips include not incurring any new obligations, which can negate any efforts to reduce your overall debt, reducing your interest rates (again consider debt consolidation), and creating a strategic budget that focuses on reducing debt. This method helps you reduce your overall debt, and more importantly, it allows you to reward yourself in ways that are not counterproductive to your efforts of reducing debt.
Focus on Sales
When mired in debt, you can easily lose focus on what is important, your business. Probably the easiest way to reduce debt is to increase your sales. If you are having trouble attracting the right customers, spend time reviewing your marketing plan to find ways to either attract your target market or find new markets for business. Additionally, come up with some strategies for wooing the public to your business. While it easier said than done, repaying your debts with earnings is both the best way to reduce debt and a good measure of your business’s health.
Set Goals and Objectives
Like our personal lives, our business financial lives can get out of control without a clear goal in sight. Furthermore, goals are your milestones that track the success of your business. Make a small list of both long-term and short-term goals that fit your business’s mission. For each objective (task) that you wish to conquer, you get closer and closer to achieving your financial goals. The more well-planned goals are those that are actually achievable and quite simple.
Your objectives should be just as accessible and clearly lead you to a path of financial success, and more significantly, freedom. These goals and objective should be revisited at least once a month so that you are reminded of these milestones. Also, do not be afraid to revise these goals, as your business’s needs change.
On Course to Financial Health
When drowning in debt, business owners might find the task of reigning in an out-of-control budget quite daunting. However, just like you did not incur the debt overnight, the chore of getting yourself back on track will take discipline and a lot OF planning. Thankfully, in today’s market, a business plan gone haywire can be remedied in any number of ways.