Page 11 - THE NOTICEBOARD EDITION 62 SEPTEMBER 2020

September, 2020 Page 11

HOW TO REDUCE BUSINESS DEBT

unning a totally debt-free business might not be possible, but reducing your
debt is a wise move. Your business is no different than your home—too much

Rdebt can cripple you. Although it might be difficult to run a debt-free
business, you should try to manage and reduce it as much as possible. Here are 13
things you can do to help lower the amount of debt your business carries.

b e n c h m a r k fo r w h a t i s
considered strong margins. Do
you know yours? Check with your
industry trade group, but once
you know it, make adjustments.
You can raise your prices, lower
your costs, or both. The goal
should be to raise margins move it at cost or for a small loss,
without raising your overhead liquidating is better than
expenses. What are others keeping the money tied up. Sell
charging for the same item? Can
it online—eBay or Craigslist, for
Know Your Numbers: Don't just be you purchase more at a example.
familiar with your numbers—know significantly lower cost without
them. Knowing them means that losing the savings to debt Check Your Interest Rates:
you know the cost of each of your service? Business owners are still
raw materials, labor, rent or lease enjoying an economic climate of
costs, and everything else. Do you Watch Your Inventory: Like your low-interest rates. If you have
know what each item costs down to refrigerator at home, some items older debt, it's time to
the penny? Do you know the tend to linger. Don't put off renegotiate the terms.
interest rate on each of your debts? ordering more of your popular
If you don't, you're probably paying inventory but look for the Talk About the Terms: If you're
too much for something. product that isn't selling and h av i n g t ro u b l e m a k i n g
liquidate it. payments, talk to the supplier
Be Smart About Your Ordering: Inventory is probably where most about extending the terms. You
Sometimes you stock a poor- of your money is tied up. You're aren't going to save any money
margin item that gets people into probably paying interest on that but lower payments may give
your store, but as a general rule, if stale inventory that everybody you the financial room you need
it's not getting you to the margins forgot about. Don't let it sit in until the product sells.
that others in the industry report, it your store unnoticed. Even if you
may not be worth your time. Sales Sell and Lease Back: Do you have
that result in ultra-low margins are relatively new fleet vehicles or
costing you money. Identify other larger items? Sometimes
unprofitable sales and eliminate it makes sense to sell the items
them or look for a lower price from and lease them back. Payments
suppliers. might be lower. To gauge the
payoff that comes from this
Increase your Margins: Speaking of
margins, each industry has its own Continue on pg 12

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