Although dealing with debt sounds terrifying to a small business owner who wants to change the world, it’s a normal and natural part of being CEO. At one point in their existence, even the world’s biggest corporations have struggled to stay cashflow positive and dig their way out of serious debt. However, it’s important to stay calm and understand that debt isn’t necessarily a one-way street to bankruptcy. On the contrary, by having a methodical approach and being proactive, not only can you get rid of debt, but also take this an invaluable business lesson that will make your brand more resilient.
- Stay organized and prioritize
Owing a lot of debt to multiple institutions can be very overwhelming but trying to get rid of all of it at once can throw you into a chaotic vicious circle where you won’t achieve anything. Instead, try to prioritize and sort your debts. Start with the ones with the highest interest, because they are ones that get biggest over time, so the faster you get rid of them, the better. Don’t try to cover all debts at once and focus on just one at a time.
- Plan your budget from scratch
Most businesses end up in debt because they had a problem with allocating their budget, so work with an expert in financial planning to allocate your budget from scratch. Use the same methodical approach that you would use for applying to University of Washington 华盛顿大学 as an international student: always focus on the bigger picture, sell off things that you don’t need, lease instead of buying, downsize departments or staff that does not bring any contribution, and consider moving to a smaller office with smaller rent.
- Consolidate large debts
If you’ve gathered debt that is simply too high to pay off, don’t say no to debt consolidating and debt refinancing solutions. These can buy you more time and literally save your business, provided that you choose the right institution. Ask around at your local banks if you have good credit, or if you don’t, do some research on Fintech and alternative financial solutions.
- Reward your clients
This may sound counterintuitive but rewarding your clients can actually help you increase your revenue. Raising prices and putting customer service on second place might be your first instinct, but it’s only a short-term solution. Instead, start loyalty programs to show appreciation to your most valued customers and they are more likely to come back and recommend you to their friends. This will trigger a boost in sales and give you some much needed financial support.
- Don’t let your clients know you’re in debt
As CEO or CFO, you are not alone in your struggle to dig your business out of debt. You can ask help from financial institutions, involve friends and family, brainstorm solutions with people from other departments. However, clients should not know that something is wrong. Even if they are satisfied with your products or services, finding out that you’re sailing rough waters could make them feel insecure and look for a collaboration with another company, so make sure your worries and stress aren’t reflected onto your business partnerships. Be active on social media, don’t give up on marketing, engage with your customers as usual and maintain the attitude of a leader. This can bring you more clients and, sometimes, it can even attract investors.