Tips for Getting Your Businesses Out of Debt With Long-Term Success in Mind

By; Julia Mitchell

For many small business owners, debt is a familiar yet problematic fact of life. You may be in debt because of a bad investment or two, or maybe you made a few impulsive choices when you were starting out. Perhaps, you realized (too late) that you don't have the time to run a company, manage social media accounts, and construct a small business budget simultaneously. Many entrepreneurs try to do it all—but it's fine to ask for help if you need it. Consider the following four tips from Global Threads for digging your company out of debt and getting back on track to financial success.

1. Focus on Your Company's Financial Health

Your first step should be knowing how much you owe. If you're ignoring a mountain of bills and hoping it will go away, it won't—but your options for repayment may not be as bad as you think. If you have debt from numerous sources and you're having trouble managing your monthly payments, consider consolidating your obligations to roll all of them into one payment. Many lenders offer consolidation with low-interest rates. Other professionals you may want to consult with would be accountants, tax attorneys, and financial advisors.

2. Focus on Getting Paid

If you have clients or customers who never pay on time or who you regularly have to hound for payment, it’s time to implement stringent payment terms. This ensures timely payments to you, and keeps them from being delinquent. Another option is to find new ways to invoice your clients. Can they pay online or do they always have to write a check? Offering an online payment option can make all the difference. If invoicing is an issue, designate specific days to run invoices twice a month. You can also use a free online invoice generator to customize invoices to fit your business, complete with your logo, preferred fonts and a link to your payment processing page.

3. Register Your Business as an LLC

You can immediately improve the financial status of your company by forming it as a limited liability company. Registering as an LLC will net you certain tax breaks and other advantages such as being able to separate your company from your personal assets, which is crucial if you have significant commercial debt. Check the requirements for forming an LLC before you sign any paperwork, and consider using an online formation service to avoid high lawyer fees.

4. Look Into Grant Opportunities

Though they may be challenging to find, there are grants that can help you get back on your feet. Special opportunities are available if you are a woman or a minority who owns a company, and business owners with disabilities can check with the local and federal government for grant opportunities as well. Start with a solid business plan and consult with financial advisors and attorneys to develop a foolproof document that will get the attention of those reading your application.

Facing your debt as a small business owner may be one of the hardest things you do in your entrepreneurial career, but making a plan to pay off what you owe will help you in the present and in the future. Start with small moves, such as consolidating your debt and forming an LLC, as well as implementing strong invoicing practices, and look for grants and educational opportunities to further advance your business.

Tips for Getting Your Businesses Out of Debt With Long-Term Success in Mind

At Global Threads we put a relentless focus on our quality product, but our most important core value is our endless devotion for our customers. Let’s go beyond the threads.