Too much debt, insufficient capital, and poor credit arrangement are three main causes of small business failure in the USA according to the small business administration.
The average gestation period for small businesses can be as much as 3-4 years however some businesses often discover that the accumulated debt burden after this gestation period is another burden on its own and can often lead to business collapse. In this article, you will discover five innovative ways of dealing with debt so as to forestall filing for bankruptcy.
• MINIMISE BUSINESS DEBT BY REFUSING TO TAKE THAT LOAN
As a small business owner it is important to manage your finances in such a way as to minimize your debt since you do not want the business to be insolvent or collapse suddenly, cutting down on loans is one way to minimize business debt while taking business loan can seem attractive, it is important that you think of its repayment hence, Do not accept all loan offers.
• GENERATE MORE SALES
Sales they say is the life of any business. To eliminate any business you only need to block its revenue. Be innovative; always find new ways of increasing sales. It is all on the bottom line. More generated income will automatically relieve your business of its debt burden if managed properly. Offer incentives to the consumer for more purchases and increase the exposure of your business to more potential customers.
• DEBT CONSOLIDATION
Debt consolidation strategy is another innovative way for a small business owner to manage it debt properly. Debt consolidation method involves aggregating various high-interest debts into a single low-interest debt sometimes taking up by another company for ease of repayment.
A business debt consolidation loan will allow a business owner innovatively refinance its loan through the debt consolidation company and thus eliminates having to deal with many creditors and also spreading the repayment over a longer period of time at lower interest rate.
• ORGANIZING A STAKEHOLDERS MEETING
Partially involving your creditors in the financial re-engineering of your business are an innovative way of renegotiating your debt with creditors. Creditors are stakeholder in any business since the successes of such business automatically contribute to their success hence involving them in how you intend to restructure and refinance their credit will attract their operation. There is no point hiding from your creditors let them be aware of your present predicament and ask for their support and cooperation, oftentimes they will oblige you.
• FINALLY, ANOTHER INNOVATIVE WAY OF MANAGING BUSINESS DEBT IS BY DRAWING DOWN ON PERSONAL INTEGRITY CAPITAL :
In fact, this should have indeed been the first option, I only saved it to be the last on my list. Personal integrity capital is your worth has the business owner, approach friend and family to savage you for steering business collapse, friends and family will respond to your request if you are high in the personal integrity capital index, friends and family will extend funds to you sentimentally which will allow you pay off creditors and save your business. You will also draw down on your saving to save your business from mounting debt.
In summary, small business owner can manage their debt by cutting down on loans, by generating more sales, by consolidating their debt, by involving their creditors as stakeholders and finally by drawing down on personal integrity capital.