With just over 2 million small companies in Australia and estimates of just over 1 million loans for small businesses, over half of all small firms in the country hold a loan. Small company debt may easily mount if you’re not careful, leading to restless nights, worry, and even business collapse as a business owner.
A recent study by Gallup, a research-based global performance management consulting company, found that 49% of small business owners struggled to manage their loans for small business debt. While you may need to take on debt to grow your firm at times, impending debt may take the fun out of being an entrepreneur.
Since small businesses are critical to the development and viability of Australia, here are a mortgage broker’s top recommendations to help get rid of your company debt faster, so you can restore your sanity and focus on more essential small business activities!
- Select A Debt-Reduction Plan
The ideal plan for paying off a loan for a small business will be determined by the amount owed, current cash flow, and, in many ways, your willpower. These tactics may be used to pay off any form of small company debt, but they’ll only work if your small business finances are in order (which is where the budget comes in). Two common debt-reduction strategies include:
- The spartan approach. Create an essentials-only budget and a list of things you won’t buy until your debt is paid off. If you’re more of a “spender” than a “saver, “it’ll be difficult to keep to.
- The percentage strategy. Set aside X per cent of your profit to pay down further debt.
- Make A “Debt-Reduction” Schedule.
You should be able to determine when you’ll have paid off all your debts once you’ve established your budget and debt reduction strategy (provided you stick to the plan, of course). Putting a finish date on your calendar, along with a few other “debt payback objectives,” can help you stay motivated and track how well you’re doing with your loan repayments.
- During Busy Seasons, Pay Back Extra
Consider paying extra on your debt if things are going well and your company is producing more money than normal. It has the potential to save you a lot of money in the long run.
- Renegotiate Your Loan’s Conditions
If you’ve fallen behind on your payments, don’t be hesitant to call your mortgage broker or lender to discuss your loan conditions.
Lenders lose a lot of money when they send loans for small businesses to collections; the last thing they want to do is send a collection agency after you. Explain your financial circumstances to your lender, and see if they can work with you on late fines, payment restructuring, or even renegotiating your interest rate. A hardship letter may also assist you in your efforts to negotiate with creditors.
Just keep in mind that renegotiating the conditions of a loan is likely to hurt your credit score, so employ this strategy only if you don’t plan to apply for more credit in the near future.
- Boost Your Cash Flow with Additional Revenue
The more cash you have on hand, the more quickly you can pay off your business debt and any outstanding debts. This may appear to be an easy task, but it is not. However, taking the time to sit down and develop concrete tactics to enhance your cash flow may provide significant results in a short period.
So, when you’re looking for ways to make extra money, start with the low-hanging fruit—easy ways to get more money quickly. Here are some simple to understand ways your small business can generate more income:
- Diversify – Is it possible for you to add a new product or service to your present offering? Can you broaden your marketing strategy to reach previously untapped niche audiences?
- Upsell – Are you able to sell more to your current customers? Can you provide any incentives or package your present products or services to persuade existing customers to purchase more from you? It might only take a brief email with a flash sale, a limited offer, or subscriber-only promotions to boost income.
- Whether your cash flow is being stifled by static inventory, consider if you can change your buying patterns or switch to suppliers that give returns for unsold items.
- Increase your prices – Charging extra for your products or services is a simple way to boost revenue if you maintain the same sales level. Before you raise prices, inform your current clients that they will be raised shortly and ask if they want to place an order before the change occurs.
- Boost Productivity
The majority of firms could simply boost their present productivity rates. For example, investing in new technology, training to increase skills, and establishing more efficient business systems are all low-cost strategies to boost your company’s productivity and, as a result, pay off your loan for small businesses faster.
- Increase Your Marketing
You can boost your sales and cash flow by investing in effective marketing methods. Stick to the tried-and-true revenue-generating tactics – such as PPC Advertising – that can be tracked and refined over time to bring in new clients at a minimal cost.
- Reduce Your Debt by Consolidating
Debt consolidation combines numerous smaller company loans into one large, presumably low-interest loan. This might help you organise your monthly expenses and lower interest rates than other loans. However, consider that many of these need collateral or personal guarantees, which might put you in danger.
Debt consolidation is a good option for companies with many small business loans or a lot of credit card debt, resulting in excessive interest rates or too many payments. So, it’s vital to get the advice of your Mortgage Broker before combining debt to ensure you get the most out of this technique. The goal is to make sure this strategy doesn’t simply free up maxed-out credit lines while also putting you in deeper debt.
No matter what loan for a small business you have, a mortgage broker can help you pay off your loan faster! So, what are you waiting for? Get in touch with a reputable mortgage broker now and enhance the profitability and functionality of your small business today.