Here we have some of the essential steps which will help you lower your business debt to become financially independent.
1. Don't Be Afraid to Plan
One of the main reasons any business is unable to lower its financial debt is because of their fear to make the necessary changes in their business model that will allow them to make this financial breakthrough.
In order to lower your business debt, you’d need to make some reasonable and realistic financial planning techniques. In this discussion, you should think about the following points and get clear about them:
- Define ‘what lowering your business debt’ exactly means to you – financial problems are unique to all organizations so don’t follow another business’s financial plan.
- Make an ingenious, realistic, and truthful picture of your current financial situation.
- Do an accurate assessment of the hurdles you’re going to face in your path.
- Make a realistic notion as to what you’ll have to abandon in pursuit of your financial goals.
- Make a series of aims and objectives that might aid you in lowering your business debt.
Many mobile applications are available that help you keeping the track of your money, spending, and saving. These are two of the top ones to take a look at.
- Mint– A paramount app for monitoring your money. This tells you the due dates of your utility bills, what you have in your business account, as well as what you could pay.
- Wally – Best application for tracking your expenses. It’s a streamlined, clean application that is truly convenient to use. It lets you take photographs of your receipts. In addition to that, it fills the geo-location info which saves you many steps.
2. Set Financial Goals
Your financial life has many facets. If you want to reach your overall financial independence goal then just go with establishing sub-goals and targets in several areas of your financial life, involving,
- Increase your income/profit.
- Control your expenditures.
- Pay off your debt.
- Understand your saving patterns.
- Determine your investment goals.
- Define your long-standing financial goals.
All these areas require further sub-areas to work and focus on. For instance, with income increase – try to think of as many ways as possible to work out key areas of your business to invest in that can help to generate more money. Do the same with other areas.
3. Cut Unnecessary Expenses
One of the most important steps in lowering debt and getting financially independent is this very step. Take a deep look at your operating costs to cut down on expenses that are not crucial for daily business operations. Cut all the needless expenditures off that tend to increase your debt and make you weak financially.
The cash you save this way will be employed in building savings, investing for the future, and getting out of debt. Just master this technique and you’re all set to move your business forward.
4. Keep Moving Forward
When you take control over your spending habits, your income/profit will increase and debt will decrease, which means that your business will start moving forward. The other strategies might include; continual improvement of your workforce’ skills, increase your value in the eyes of your employees, etc.
5. Make Investments
Investment means that you’re employing your cash to earn more cash, and can get you out of debt. However, for investing, again you need to raise your income which is possible when you lessen your expenditures. Think, but don’t overthink before investing your money. Nobody knows about the next money trends. When in doubt, you should make small investments instead of large ones.
We suggest you not only making investments but also diversifying them. This point, in the bigger picture, means that you should have fixed-income investments, some cash invested stocks, peer-to-peer (P2P) lending, natural resources, real estate, and cash. This will prevent you from taking the big hits in case any of above sectors tanks.
Some apps that may come in handy for first time investors are:
- Acorns – Acorns is ideal for first time investors. It gives the ability to link a business debit or credit cards to the app, and rounds up any regular purchases made by the business and invests the difference in the purchases into a portfolio of chosen index funds by Harry Markowitz, the Nobel prize winning economist.
- Stock Market Simulator – This app allows you to try out the stock market before you actually invest in the real deal. Here you can practice by investing virtual funds to see how it plays out. This is great for first time business owners dabbling in the stock market.
- SigFig – SigFig is an online investment tool that tracks, optimises and manages existing portfolios. It also still allows any user to manage their overall investments all through this app which is great for those who may have many investments all at once.
- Motif Explorer – This app investigates trends and other world events to help you decide in overall investment opportunities. This one allows you to build a portfolio based off related stocks which is great for your business.
These are some of the main apps that can help when it comes to first time investing for business owners.
6. Expand Income Sources
To get your business debt lower, it’s advised to not just only expand your investments but also expand your income sources. Find ways to increase revenue and customer sales by creating offers that will bring in business. Your focus should be to bring in sales and revenue instead of huge profits. This will not only help to elevate your income but reduce your debt as well.
As one of the most important business endeavors is lowering your debt – these above mentioned are the key steps in the path of seeking a successful future by pulling your business debt down.
About the Author: Karen Watson is a professional bookkeeper who loves numbers and her job. She currently works for Balancing Books Bookkeeping and enjoys helping her clients. In her spare time, she spends time with her husband traveling and loves to read.
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