The lure of opening up a small business has drawn many Americans into launching their own startups, so they can set their own hours and have a large degree of flexibility in their lifestyles. However, those first few years of a startup company generally involve taking on considerable business debt. Here’s how you can manage that debt so that it doesn’t end up crushing your small company.
Establish Positive Cash Flow
One of the most effective ways of managing business debt is to increase your cash flow, and this can be accomplished in several ways. First of all, you should closely monitor all business expenses, so that you’re not paying for anything you don’t really need. Once you’ve minimized expenses, it’s time to focus on increasing incoming revenues. That can be done by penetrating new markets or adding new products to your existing catalog. You might also consider factoring as a means of infusing significant amounts of cash into your company so that you’re not waiting for slow-paying customers to remit invoices with payments.
Consider Applying for a Loan
Another tried-and-true method of dealing with business debt is to apply for a loan of some type which gives you access to quick funding. If you do consider taking out a loan, you should be very careful about the type of loans you apply for. Don’t necessarily take out the largest amount you might be eligible for, because it could be very difficult to pay that amount back each month. Calculate just how much you can afford to pay back on a monthly basis and limit your loan application to that specific amount.
Change Up Your Budget
When confronted with significant business debt, one thing you should always do is take a thorough examination of your present budget to see where you can make useful cuts. This doesn’t mean you should gouge any particular area, but you should instead make a series of smaller cuts across many areas, and hopefully, the strategy will provide you with enough free cash that you can pay down on your debt. Also, think about ways that you can generate extra cash, for instance by renting out available space in your building, or by selling off equipment which is not strictly necessary.
Does your small business need immediate cash?
Many small businesses could get to the next level of success if they had access to a quick infusion of capital to help them get there. At Integrity Financial Capital, we believe in helping small businessmen achieve their goals, so contact us to see if we can help your company grow and prosper.
