Tips to relieve small business debt

It's common for SMEs to accumulate debt in order to meet the demands of their business operation, but unfortunately many small businesses are increasingly becoming crippled by the demands of their debt repayments.

No business owner wants to go through the long and costly process of filing for bankruptcy, so how do you position your company to meet its debt repayments?

Prioritise your repayments

As a first step it's important that you first determine what you owe. Making a list of all debts, payments and terms of the repayments will give you a strong indication of what needs to be paid off most desperately. It's a good idea to highlight the debts that could potentially become costly down the track and focus on paying those first.

Contact your creditors

It's in your best interest to notify your creditors immediately if you're having difficulties making repayments. If the creditors are aware of your situation chances are they will work with you to find a solution that works for everybody.

Many creditors may even be willing to make adjustments to interest rates in order to increase the probability of receiving payment. If you want to know more, here are some tips on what to do when you can't pay all your creditors.

Review your costs

When you revisit your budget make a conscious effort to review your costs. Review your operating costs and determine if there are any areas you can save money without affecting the overall quality of your product. For instance, revisit your suppliers and see if there are any alternatives that could save you money while still providing value.

Increase marketing efforts

Sometimes the best way to recover from small business debt is to generate business growth. Increasing your marketing is a great way to bring in new customers, but it's also a challenge to do on an already tight budget.

With that said, marketing on a small budget isn't impossible but it's important you strike the attention of the right people at the right times. Try to target your marketing toward your typical customer at a time they are more likely to purchase your product.

Debt is a part of business but how you manage and restrict your debt will truly define the success of your SME.

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