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Many small business owners in Canada are concerned about their ability to repay the debt they took on to help cope with the pandemic. If you’re among them, you’ll be pleased to know that there are steps you can take to get your business out of excess debt. These steps are similar to the steps you take to get out of personal debt. They include creating a budget, reducing expenses, increasing revenue, and consolidating debt.
Create a Budget and Reduce ExpensesCreating a budget is one of the most important steps to getting your business out of debt. To create a good budget, you need to first know how much your business spends on various types of business expenses. Consider using expense management software to track your expenses and generate reports.
The reports help you determine your business’s expenditure in different areas. With this information, you can decide which expenses to cut down on based on your business priorities. For example, you may realize that it’s cheaper to outsource some tasks to freelancers. By reducing your business expenses, you create surplus funds which you can use to pay off your debts.
Boost Your RevenueIn addition to reducing your expenses, find ways to increase your revenue so that you have money to pay off your debts. You can increase your revenue by ratcheting up your sales and marketing efforts, focusing on your customers, expanding your market, and adopting new pricing strategies.
Set clear goals for revenue growth. These goals will inform the strategy you use to increase your revenue. Consider increasing revenue by cross-selling or upselling current customers. You can also try tactics such as bundling complementary services or adjusting your pricing strategy to match your goals for revenue growth.
Implementing better marketing strategies can also boost your revenue. Analyze your target customers to gain insights that will help you improve your current promotional efforts. Examples of marketing channels and strategies you should include social media marketing, creating a website, email marketing, buying ads, and more.
You can also inject new life into your sales channels to make your customers enthusiastic about buying your products or services. For example, you can introduce subscription sales or incentivize your salespeople.
Consolidate Your Business DebtYour business may have several loans, and you struggle to keep track of the different balances, interest rates, and due dates. If you find managing multiple loans burdensome, consider consolidating your business debts. The debt consolidation process involves taking out a loan to pay off all your existing business loans. As a result, you make only one monthly debt payment.
Look for business debt consolidation loans with a lower interest rate than what you’re currently paying. Furthermore, make sure the amount of the consolidation loan covers your entire business debt.
Grants, too, can help pull a business out of financial straits. Getting them can be a challenge, though. You can improve your chances of getting one by making sure you have a good business plan. Find out which grants are available for businesses in your industry and write an excellent grant proposal that targets those grants.
A Path to a Debt-free BusinessYou can reduce burdensome business debt and eventually get out of it by taking the steps this article outlines. Find out more at Willowdale Real Estate.
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Contributing Author: Tina Martin