3 Insights to Help Small Business Owners Tackle Tough Debt Problems
The Financial Literacy Month has come and gone, but the perfect time for business owners to learn how to get out of debt and maintain a healthy cash flow continues. Not sure where you begin? Check out MicroBilt for financial guidance and resources, as well as credit data and risk management solutions. Continue reading for more tips on how to tackle business debt.
Learning Is a Lifelong Journey
When it comes to running your business, learning should be a journey that never ends. The thing is, no matter how successful and confident you become, there’s always something new to learn — whether that’s educating yourself around the latest, cutting-edge tech or learning about the latest risk management recommendations for businesses.
If you really want to commit to learning how to lift your company out of debt — and keep it there — you could also get an accounting degree. You don’t have to set foot on campus to do so. Earning an accounting degree will provide insight into marketing, economics, finance, and business ethics. All of which can shape you into a more responsible entrepreneur.
While we’re on the topic of learning, it’s also important to mention the value of being able to learn from your mistakes. If your business is in serious debt, you may have made some mistakes to end up there, but it is possible to turn those missteps into valuable lessons. Then, you will have mastered one of the most important traits for being a successful business owner: being able to roll with the punches.
It’s Never Too Late for Your Credit
An unwelcome side effect of debt is that taking on too much can impact your credit score. As a business owner, your personal and business credit report will both play a factor in whether or not you are approved for loans, credit cards, and other financing options. This is why it’s so important for you to pay attention to both.
Alternative credit scores from Connect can also be a beneficial tool if you need to improve your score due to a large debt-to-income ratio, a lack of history, or any other factors. If your business relies on consumer credit scores, Connect can also expand your client pool to include people who are responsible for their finances but don’t have a lot of data recorded in major credit bureaus.
You also need to understand the key differences between good debt and bad debt. If, for instance, you take out a loan to cover tuition for your accounting degree but that degree will bump up your revenue to an equal or higher number in time, your loan is considered good debt. Bad debt generally refers to high-interest credit cards and loans, which do more harm than good to your finances.
Reaching Out for Help Is Not Equal to Failure
If your business is in debt, you’re probably pretty stressed out — and you’re not alone. Many Americans consider debt and finances as their main source of stress. That sort of chronic worrying can take a major toll on your health, as well as the success of your business.
If you feel overwhelmed by the prospect of figuring out your debt solo, know that you do have options. Talk with your creditors, vendors, and suppliers to see if you can negotiate better rates or longer terms to make your debt more manageable. You can also seek support from other business owners and organizations that can help you come up with feasible debt solutions.
Remember, getting out of debt can take time and hard work, but trying to go it alone will only make things harder. There’s no shame in asking for help when that help will save you stress — or even your business. Above all, take care of your most valuable asset: yourself!