It is well-known that many businesses leverage debt to seize opportunities in the market, facilitate growth, and manage seasonal fluctuations. Borrowing is generally a smart move for companies if done properly, but many entrepreneurs often get in over their heads after taking on too much business debt. According to the Bank of England, 33% of the UK’s small and medium-sized enterprises had debt levels of over 10 times their cash balances. You can’t escape your business debt or hope it vanishes on its own, but you can do a lot to control and even eliminate it. Here are some of the best ways to get rid of business debt.
- Increase your revenue
You need more cash to repay your loans. As such, you need to raise your revenue to have more money in the bank. Fortunately, there is no shortage of tactics you can use to increase your company’s revenue. For instance, you can create promotions to make people more interested in your products. However, be careful about discounting your services or products too much since this affects your revenue-generating abilities.
Also, a study showed that sales could increase by up to 73% if retailers provide bonus packs or bundles. These packages bring in a lot of sales because more consumers perceive they are getting extra value for the same price. You can also consider raising your prices, especially with low margins. Price rises might scare off some customers, but many more will be willing to pay more if the value of your products or services is clear. Finally, sell your excess inventory to other businesses and suppliers to get more cash quickly instead of waiting for clients to purchase all items in stock.
- Hire a debt-restructuring company
Many types of debt, including business debt, can be restructured to change loan terms and make them easier to pay back. Therefore, you may benefit from hiring a professional debt-restructuring firm for assistance if your efforts to get rid of business debt alone aren’t working. These firms negotiate with your creditors and debt collection agencies to extend, renew, and even alter existing credit arrangements. Generally, you will have to agree to a written contract between your business and the debt-restructuring company and set up automatic withdrawals from your bank account to settle your debts. It is advisable to be honest about your financial situation with your debt-restructuring partner to receive an arrangement that works for you and your creditors, so keep this in mind.
- Get help from friends and family
The average Brit reportedly owes friends and family members £2,813. Friends and family members are usually the first people many people turn to when in a financial crisis, and business debt is no exception. Your friends and family members may be willing to pay off your debts to help you get back on your feet. They are the easiest lenders to borrow from and always provide better terms than traditional creditors. For instance, you may get an interest-free loan with a longer repayment period.