Are you also struggling with efficient DEBT MANAGEMENT?

Starting a business is a dream for many business owners.

But 20% of businesses fail within their first year of operation!

I have seen 9/10 business owners struggling with LACK OF FUNDING or WORKING CAPITAL.

They finance their businesses with personal guarantees and debt, which is actually a HUGE risk for their families.

Here are top 3 mistakes business owners make while managing their debt:

?? High Leverage Ratio:?

This is a very common and big mistake of debt management. A high leverage ratio means that your debt is much larger than your equity or assets. A high leverage ratio can expose your business to higher interest costs, lower credit ratings, and greater risk of default or bankruptcy.?

Moreover, a high leverage ratio can limit your ability to borrow more money or invest in new opportunities, as lenders and investors may perceive you as too risky.

?? Mismatched Maturity:?

This means that your debt repayment schedule does not match your cash flow or revenue generation.?

For example, if you have short-term debt that needs to be repaid soon, but your income is seasonal or uncertain, you may face a liquidity crisis or a cash flow problem.

?? Lack of Strategy:?

Many businesses fail to develop a solid credit management strategy, which can lead to late payments, bad debts, and cash flow problems.

A lack of strategy can also make it difficult to prioritize and plan how to pay down your debts.

But..

What if they tell you that you, being a busy business owner, can take control of their liabilities by implementing effective debt management strategies?

If you are also struggling with managing debts, then this newsletter is for you!

I have shared 7 detailed strategies that will help you with debt management:

Let’s delve deeper:

1?? Analyze your Business Budget:?

Review your past financial plan and rework your budget to give yourself more breathing room.?

Cutting costs, reviewing your expenses, and identifying areas for savings that won't impact the objectives of the business can also free up additional cash.

2?? Improve Your Cash Flow:?

You can improve your cash flow by offering discounts for early payment, negotiating better payment terms with your clients, reducing your inventory levels, and delaying payments to suppliers.

3?? Review and Prioritize Your Debts:?

Review all of your outstanding liabilities and start to prioritize and plan how to pay them down.?

This may include bank loans or overdrafts, business credit cards, lease obligations or contracts, employee-related liabilities, and business taxes.?

Prioritizing your debts can help you focus on paying off the most important ones first.

4?? Review Loan Terms & Consider Refinancing:?

Review your loan terms and consider refinancing if it makes sense for your business.?

Refinancing can help you reduce your interest rates and monthly payments, which can free up additional cash flow to pay down your debt.

5??Increase Your (Profitable) Sales:?

Increasing your sales can help you generate more revenue and pay down your debt faster.?

Focus on increasing sales of your most profitable products or services. You can also consider expanding your customer base or entering new markets.

6?? Negotiate with Creditors:?

If you are finding it difficult to complete your payments, you may be able to mediate with your creditors for better terms.?

As a last resort, you may also consider seeking debt relief, such as debt consolidation or bankruptcy.

7?? Seek Professional Help:?

If you feel that your debt has become unwieldy or worrisome, work with a financial advisor or accountant to bring your liabilities back under control.?

They can help you develop a tailored debt management strategy, identify opportunities for cost savings, and ensure that your business remains financially stable.

Remember, managing business debt is necessary for the success and growth of your business!

I hope this helps!

And that’s a wrap.

Stay tuned for more insights in our upcoming newsletters.

Your success is my passion and I am here to support you at every step.

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Closing remark!

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Best regards,

Gary Jain

Founder, Ledger Labs