A guest post by Ted James.

Take Steps to Decrease Your Small Business Debt

Many small businesses experienced debt even before the pandemic, and many more had to take out loans or go deeper into debt just to stay afloat. If you're one of them, you should take actionable steps to decrease your debt today. Here are some tips to help you get started.

Prioritize Your Debt

Before panicking about the debt, know what you owe – not just an estimate. Then, start prioritizing your debt. Pay off debt to your vendors first. If it's an option, make payment arrangements with your lenders as soon as possible, as well. This can protect your business' reputation and prevent debt from incurring serious negative consequences.

Give Customers Incentives for Paying

Go through all your unpaid invoices. If you haven't already done so, send the client an email as a reminder of their debt. Include a professional-looking invoice, which you can generate using free online templates. An invoice generator can help you make more professional-looking invoices that will assist in maintaining precise records, as well.

As you get new clients, ask them for a down payment. It's standard to ask for 10% to 25%. Another way to get clients to pay is to offer a discount for paying early. While it may seem counterproductive to lose money to get money, the incentive doesn't have to be much, just enough to entice clients to pay.

Form an LLC 

Consider forming a limited liability company (LLC). You'll owe less in taxes with this business structure and enjoy some legal protections. Make sure you review the regulations of limited liability formation first, though, and speak to your attorney, accountant and other professionals to help you navigate the process.  

Improve Your Business Knowledge 

Enhance your knowledge of accounting or business to improve the financial well-being of your company. After, you'll know the tricks of the trade, including how to reduce your business expenses and negotiate better.

Fortunately, the internet is filled with reputable sites created by experts in business. 

Consider a Grant 

As you're decreasing your debt, look into grant opportunities. Grants are free money provided by the government, private organizations, or individuals to help companies that are struggling. 

Before you apply, you need to have a detailed business plan. It should outline your goals, specify your market, and include information about your business structure and other aspects of your company.

During your search, choose grants specifically for your industry, and make sure you take your time filling out applications to improve your odds.

Think About Expanding Your Products or Services

While you can use what you currently generate and pay debt slowly, the interest could harm you significantly, and it still might not make a dent in your debt. Instead, try expanding your products or services to increase revenue.

Getting Out of Debt Is Possible

If you're trying to get your business out of debt, look into grants, increase your business knowledge, and consider expanding to increase your revenue. It also helps to select the right business structure for your company. 

Andrew M. Ayers provides an education-focused client experience designed to help you take control of your future. Whether you need an estate plan or require assistance with a legal issue for your business, I’ll take the time to explain your options in plain English and help you create your best path forward in a direction that works for you. Ready for the next step? Let's set up a Legal Strategy Session to discuss the best options for you.