Tips For Keeping Your Business Out Of Debt

tips-for-keeping-your-business-out-of-debt

Many business owners operate under the mistaken belief that they must take on debt. They feel it it is necessary in order to have technology, make big deals, and make payroll. The fact is that debt will dramatically increase your risks, as far too many business owners learned the hard way during the recent economic crisis. It can be very tempting to take out business loans. Businesses that do not carry debt not only survive, but thrive. Let's look at a few tips for keeping your business out of debt


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1. Avoid Debt For Large Purchases

You may believe that you must incur debt to pay for larger purchases, but this is not always true. For example, you could rent needed equipment or property until you are able to pay for it. In some cases you can even rent to own, although every deal is different in terms of pros and cons. When you do buy something, you can usually buy it used to save money.

2. Use Social Media Smartly to Promote

Advertising can be a very effective way to let people know about what goods and services your business offers. Unfortunately, it can also be a significant expense. However, there are ways you can promote your business in cost-effective ways. For example, you can make use of social media channels like Instagram, Twitter and Facebook. These are easy and effective ways of promoting your business. And paid advertising can be very cost-effective as it's so targeted. 


Recommended reading: Financial Tips That Every Single Startup Entrepreneur Needs To Know


3. Use Monthly Promotions To Boost Sales

Schedule sales and promotions once a month and offer discounts for your goods and services. Take advantage of social media to generate a buzz about your sale. The extra money you make from your sales can be dedicated to reducing any debt payments. Make sure you discount your items enough to draw many buyer in, but not enough so that you no longer have a profit margin.

4. Prepare For Slowdowns

Many businesses get trapped in a debt spiral by borrowing during slumps when their profits decrease during difficult economic times. They fall deeper and deeper into debt when borrowing more to stay afloat. One way you can avoid this trap is by examining forecasts for your industry and setting aside savings in advance for slow times. Have someone help you predict future sales trends by analysing past sales.


Recommended reading: A Quick Guide To Your Balance Sheet: Assets, Liabilities and Equity


5. Get Professional Help

Handling business finances and debts on your own can be very difficult. It's worth investing in an accountant's time. And if you find it hard to make payments or meet the needs of your business, you can get finance help on how to budget better and how to pay off any debt you already have.

You will find the economic environment much more forgiving and less stressful when you are operating debt free. When you have a good budget and low debt, you are more likely to get by during tough economic times.

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Tuesday, 10 December 2019
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