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Reduce Business Debt

A Practical Action Plan

Reduce Business Debt: Practical Steps You Can Take

Business debt can be a good thing. It can help you to establish your business, fund growth or invest for the future.

However, if the level of borrowing becomes excessive it can lead to many problems, such as:

This article gives a framework and various practical ideas to help you reduce your business debt.

A framework for recovery

There are six basic strategies that can help you out of excessive debt:

  1. Reduce costs

  2. Increase income

  3. Restructure liabilities

  4. Restructure assets

  5. Raise more capital

  6. Exit the business

The following examples in each area are not exhaustive, but may spark some practical ideas of things that you can do.

1 Reduce Costs

There are two principle ways to reduce costs:

To find big costs savings, concentrate on large savings first.

To make savings across the board, set a savings target (say, 10%) and reduce each budget by that amount. Then take small steps to reduce costs, eg: reduce train costs by travelling "standard" instead of "business"/"first" class, opting for cheaper equipment when purchasing, etc..

2 Increase Income

There are various ways of increasing the amount of money flowing into your business, such as:

3 Restructure liabilities

Your 'liabilities' are all the amounts of money that you owe to other people. Restructuring your liabilities doesn't necessarily reduce the overall amount you owe, but it can give you more cash, more disposable income and/or reduce the amount of debt you need to provide working capital.

Examples of ways that you can restructure your liabilities to reduce your debt include:

4 Restructure Assets

Your 'assets' are all the things your business owns. This section on restructuring your assets also includes disposing of assets. Examples include:

5 Raise more capital

You can raise more capital by:

Also, take a look at your asset list and assess whether it can be converted into assets of greater value. For example, if you own land, can you build more offices or houses on that land?

6 Exit the business

To exit the business, options include:

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©2013 Team Technology. Further articles/resources that may be of interest include: Personality Test, Personality Type Descriptions, Myers Briggs overview, The Basics of Team Building, What Career is Right for Me?, and Career ideas.