As a small business owner, owing and accumulating debts can ruin your business if care is not taken, that is because, when the profit eventually comes, instead of planning for the next venture, you end up settling debt. As a small business owner, you really would not want to create a bad image for your business. Imagine people calling you out because you have an outstanding debt you have been unable to pay overtime.
So how do you avoid owing as a business owner?
Look at your budget. As a business owner, if you do not have enough funds to do something big, that’s fine. You do not need to borrow large sums of money to fund a very mighty project if you know you can start a small project and still make progress gradually. If you are constantly in debt, then there’s something wrong with your company’s budget. Create a budget based on the business’s current financial situation. Sometimes, it is better to start small and grow than to start big and be in plenty debt.
Reduce business expenses. If you are a business owner and you spend more on your wants than your needs, then you need to have a rethink. It is very easy to want to spend on things that you believe will make your business more beautiful or acceptable, but you need to ask yourself, will this thing really have any financial reward? You want to have a big and beautiful office, but ask yourself, will the office being beautiful fetch you more money? Before you borrow to fund your wants, think well.
Borrow little at a time. Sometimes, it is tempting to want to borrow a large sum of money to fund a large project, but why not test the waters first? Borrow just a little, look at how you were able to utilise it, before borrowing a large sum.
Prioritize debt payment. Never ever borrow money or any other thing for your business if you have not cleared the previous debt. When you begin to accumulate debts, they can become so overwhelming and can easily crash the business. So, if you are owing and you have no plans to pay yet, then don’t borrow more.
Separate business funds. Never mix your personal money with your business funds. There’s every tendency of you dipping your hand into your company’s purse, which could lead to your company going bankrupt.