Planning to Expand Your Business? Read These 6 Tips to Do It Debt-Free
Whether you have been in business for a year or ten years, perhaps you are considering expansion. Or, maybe you simply want to cut down on debt and look into expansion within the future. Whatever you are looking to do, doing it debt-free will give you the freedom to do it.
Expanding your business is a great option for those of you who are doing extremely well and want to continue to grow in other areas throughout the state, country, or region that you are in.
At Alliance One, we do everything in on our power to help businesses grow, and a lot of that has to do with cash flow. By eliminating debt and having a steady cash flow, you are more likely to have the opportunity to expand your business and reach your 20-year plans.
Read these six tips to expand your business with steady cash flow and a debt-free business plan.
Cut Unnecessary Costs
First comes first, get yourself out of debt and cut unnecessary costs. Identify the parts of the business that got the company into debt, to begin with. If you have equipment that is no longer being used, or employees that are no longer serving a purpose, get rid of it. You have to ditch any unnecessary expenses in order to build a debt-free business.
Unfortunately, this might involve hurting someone’s feelings and eliminating a piece of equipment that held value at one point in time. However, once you allow your business to rid of the old, it will make way for new and better things.
Revisit your Budget
Sometimes the debt just piles up, and you don’t even realize it. If this is your case, it is probably time to reevaluate your budget and make some adjustments. Create a budget that is based on your current financial situation.
Your business revenue must be able to cover your fixed monthly costs such as rent and utility bills. Ensure that you allot a portion of your revenue for variable costs such as manufacturing materials. This is a priority, as it keeps the business functioning.
Prioritize Debt Payments
You might not even know what you are looking at in terms of debt. There are some loans that are of higher interest, and those should be tackled first and foremost, in order to pay them down faster. If you do not, the interest will only build and you will be paying longer than you had originally thought.
Typically, this means paying down credit card debt, because it often has the highest level of interest. If, however, you have loans to pay that have a higher interest rate, you can consider paying them off or refinancing them so that they are a more reasonable monthly payment.
Speak with Creditors
You must take the opportunity to communicate with your creditors and tell them the financial situation you are in, as well as your future goals. Explain that you are looking to expand and what your timeline is looking like.
If your business is going through a hardship, be forward and honest with your creditors. Ask them if they have a hardship plan that may provide better payment terms. If your creditors do not offer a better option, request a payment plan or a reduced settlement amount.
Be clear, concise, and direct. Be 100% positive that you can fulfill your end of the bargain.
Consolidate your Loans
As previously stated, it is possible to consolidate your loans and reduce monthly payments. This will not harm your credit, and oftentimes it is the best-case scenario. If you are really lucky, you might even be able to take several shorter-term loans and put them into one long-term loan. Paying off one loan is better than keeping track and paying off several loans.
Working with creditors can be a hassle, especially if they aren’t willing to work with you. You have the option to enlist in the help of a credit counseling organization. Some of these nonprofit organizations will work with small-business owners, but you have to do your research beforehand.