Are you struggling with Credit Card or Line of Credit Debt?
Obviously, debt is never planned. When running a business, however, even small amounts of debt can create a deep level of stress, especially if there is no contingency plan in place to pay it off. If you have business debt, your number one goal should be to pay it down as quickly as possible and to determine the root cause of your debt so further financial burden can be avoided in the future.
Business revenue fluctuates and I often see business owners paying off debt with a lump sum payment when monthly income is high. In situations that are not as favourable, I see business owners paying off Credit Cards and Lines of Credit by making payments that are just above the minimum. Both methods work in the short term and they are risky. A lump-sum payment assumes that you will have higher cash flow in the future and minimum payments mean that your debt could take years to pay off. While this eventually addresses the debt issue, it does not speak to the root cause of your debt and how it can be eliminated going forward.
Will accumulated debt occur to your business again? Ask yourself what caused it in the first place. Was it an emergency payment? A frivolous purchase? An expense that you thought might add value to your business, but did not? Firstly, I suggest looking at your line items and carefully evaluating what part of your spending is giving you return on investment. To operate a successful business, you should only spend to generate profit and abolish all expenditures that cost the business. Secondly, if you have extra revenue and room to spend, I suggest saving it in a separate account so you can begin to accumulate extra funds to accommodate unforeseen business expenses.
Are your finances in order but still you feel like you are burdened by debt? A second set of eyes on your financials can often help and I have a system that helps you, the business owner, take control of your spending and eradicate future debt. Would you like to find out more?
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