Small business debt is a serious problem that grips a lot of entrepreneurs. When a global or country-wide economic crash happens, it is the little guys that often suffer the most. If you are not prepared and you have a lot of debt, you will quickly go under and everything that you worked so hard to put up will be gone.
We all agree that debt is a constant part of any business. However, it always has to be under control. If the debt starts to overtake the company’s profits, you know that you are headed for trouble. When that happens, you know that paying off business debt should become your priority.
Even as you struggle to increase your profit to help pay off debt, you may want to look into your overhead expenses. Sometimes, you can get a whole lot of savings by making cutbacks on a couple of expenses that you normally spend on. It will help you lower the credit that you usually take and the payments for these can be diverted to expenses that will help increase your profits.
Tips to save on manpower expenses to lower business debt
Smallbiztrends.com released an infographic last April 2013 that showcased the top 10 expenses of small business. The report (which originally came from Bolt Insurance Agency) identified manpower expenses as the highest that small business spend on. Investing on your skills and talent is one of the greatest ways that you can grow your business. However, there are tips that you can follow to help keep your costs at a minimum
One of them is outsourcing. It all depends on how your business operates of course. But if it is a small business, it only means that your daily operations will not require an army to run. In most cases, business owners find a lot of savings if they choose to outsource talent instead of hiring them to work in house. There are certain tasks that only crop up once in awhile. These are the manpower expenses that you need to trim down.
For instance, you decided to create an online presence for your business. Instead of hiring a website developer to work in house, you can look for them through outsourcing websites like Odesk.com or Guru.com. Once you find a reliable talent, you can hire them for a month to help you put up a website. Or you can search for web development companies who professionally take on these type of projects.
Here are some benefits to this type of arrangement.
You can minimize the overhead expenses in your office since the work will not be done in-house.
You only get to pay for the project itself and terminate the contract once the deed is done.
You are not required to offer benefits to these professionals.
These will help lower your manpower expenses exponentially. That way, you can divert your budget into other expenditures on your list – like your business debt for instance.
Be smart with expenses to help with company credit
The savings that you can get from outsourcing business processes will help shave off a huge chunk from your budget but there are other things that you can do to lower your monthly expenses. Here is a list of our suggested areas that you can save on.
Look into neighboring business to share expenses. For instance, you can talk to businesses in the same street as you are and come up with an advertising campaign together. You can promote the whole street lined with businesses and you can share the cost of that campaign.
Buy in bulk. We all need certain office supplies regularly. These include, pens, papers and other items that you need to make your business operational. Try to buy these things in bulk and go straight to the source to get a lower price.
Get discounts. It never really hurt to ask for a discount and you will be surprised that most retailers have special prices for small business owners. They usually do not advertise it so if you do not ask, you will not be given that discount privilege.
Pay any credit on time. Try to minimize or eliminate wasting your money on finance charges by simply paying your business credit cards on time. All it really takes is staying on top of your bills to make sure you will not be late on any payment.
Go digital. Some companies find it hard to go completely paperless but there is much saving to be made with it. Not only will it lower your expenses, it will also save the environment.
Opt for energy efficient office equipment. If you have to buy new items, go for the energy efficient ones. Opt for a laptop instead of a desktop. That depends on how you will use it of course. A desktop is great for graphic artists but if you will mostly use it for writing or research, then a laptop will be a great alternative. The mobility will also allow you to work anywhere.
Debt relief options for small businesses
In case you have already accumulated a lot of debt, you may want to start working on them to lower your monthly contributions. Here are two options that you can use.
Business debt consolidation. This type of debt relief option will restructure your debt payments so they come out as a single and lower monthly payment plan that runs over a longer term. This will allow you to free some funds and direct them to other expenses that you need to finance.
Business debt settlement. Debt settlement works on reducing your current balance by negotiating with creditors. You will offer them a lump sum amount that is lower than the debt that you currently owe. You want to get them to agree that after paying this settlement amount, the rest of your debts will be forgiven.