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Practical debt reduction tips for business leaders

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Running your own business can often feel like you are stuck in a never-ending cycle of not making enough money to invest back into the company, but needing more money to invest into the company in order to make a bigger profit.

It can certainly be exhausting. Thankfully, borrowing money for your business has never been easier, with a wide range of options available to business leaders. Today, the bank is not your only option, and there is a never-ending, growing list of small business lenders, peer to peer lenders, and alternative options for raising money that you can turn to in order to get the funds that you need for your business to grow.

But while borrowing money might often be an ideal way to get the cash you need right now for expansion, it can also lead to future stress. Reducing debt is key, and the good news is that you can easily go after the growth you want without borrowing more than you can afford.

Debt Consolidation

First of all, if you are already in a lot of either business or personal debt, it’s a good idea to get rid of that weight hanging over your head. Being in debt, whether it’s yourself or your business, can be an unnecessary source of stress as you try to expand your brand, and the last thing that you want is for it to become unmanageable. If you tend to borrow smaller amounts of money, a good way to clear them all off is to get a debt consolidation loan. This one loan will allow you to pay off all the loans you’re currently repaying in one go, leaving you with just one, rather than several repayments to make each month.

You can also go for a short-term loan to consolidate your debts, which might take a little bit of extra budgeting, but will allow you to clear your debt completely in a short amount of time. Payday UK is a great site to start with; they will search a panel of trusted direct lenders UK to find suitable loan options that you can use to start clearing your existing debts off. You can find more info here.

Use a Credit Card for Necessities

Along with being a convenient way to inject some extra funds into your company, borrowing money will also help to build your business’s credit rating and provide you with the much-needed positive financial history that will be necessary for the future should you decide to apply for a business loan or pitch to an investor who will want to see how well your business is able to handle its finances.

A good way to utilise debt in your favour without ending up in a situation where you’ve borrowed more than you can repay is to only use your business credit card for necessary expenses that you would have been purchasing anyway. This allows you to repay the credit card bill in full every month and keep it from getting maxed out while improving your business credit rating at the same time and building up a strong history of making responsible repayments.

Check Out the Alternatives

Getting in debt isn’t the only way to get the funds that you need to expand your business. In fact, there are plenty of alternative options to consider that are much easier to manage and have less risk attached to them. For example, you may want to pitch your business idea or ideas for expansion to an angel investor, who will invest the funds that you need into your business in exchange for shares. Not only can this be an ideal alternative to borrowing since you do not have to worry about meeting monthly repayment amounts, but many angel investors are experienced business people who are happy to take an active role in your company and act as a mentor, which can be ideal for new entrepreneurs in need of some expert guidance.

Another great alternative that is becoming increasingly more popular among small businesses is crowdfunding. There are several apps and websites that you can use to pitch your business idea to the general public, and individuals who are interested in what you have to offer can invest a small amount. If you can get several people to invest in your company, this can quickly add up and provide you with some or all of the funds that you need without borrowing. Of course; it’s not for free – usually, crowdfunding investors will be purchasing shares in your company.

Ask Family and Friends

Instead of borrowing money straight off the bat, it might be worth sitting down with your supportive friends and family members to ask if they would like to invest any of their own money in your business. If you don’t mind working with your loved ones, this could be an ideal option as it’s a win-win situation; you get to raise the funds that you need while staying out of debt, and your family members and friends get to reap the rewards of their return on investment when your business starts to grow and bring in more profits.

Of course, not everybody is lucky enough to be in a position where family and friends are able to financially support them with starting and running and business, but it’s definitely worth asking to exhaust all your options before turning to a loan. If your family and friends don’t want to invest but have the funds available, they might be willing to provide you with a loan. This can be easier than borrowing from a bank or small business lender since it’s often more flexible when it comes to repayments and your loved ones are unlikely to charge you interest.

Shop Around

Finally, consider whether or not you actually need additional funds in order to expand your business. By shopping around, you may be able to get what you need without borrowing any additional money and simply use the funds that your company already has available. For example, you may need new office equipment in order to take on more employees for your sales and marketing team; shop around for second-hand electronics and furniture that may be much cheaper to invest in compared to buying brand new.

In addition, shopping around can also help you reduce the monthly expenses for your business and make it easier to free up funds that can be invested back into the business. If you haven’t changed your business gas and electricity for a while, for example, you might find that you’re actually paying much more than you need to and there are plenty of cheaper options available that would allow you to make big savings. Consider whether or not you really need the swanky city-centre office – sometimes, moving to a cheaper, out-of-town location can be much cheaper and just as effective.

As a business owner and leader, the last thing that you want is to be consumed with debt – but sometimes, it can feel like there’s no other option if you want your business to grow. Thankfully, there are several things that you can do to get back in control of your current debts and get the funding you need to expand without borrowing further.



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