It can be expensive to run a small business, especially during the first few years when you are working on building up a customer base to make the business self-sustaining. It is not uncommon to get into debt while trying to launch your business. Fortunately, there are several ways that you can dig your business out of debt.
Raise More Revenue
As a business, you have the potential to increase your bottom line by selling more products or services and adding more customers to your base. You may be able to raise some extra cash by running low-cost promotions, having a sale or selling inventory. Increased revenue is often possible when your team is more productive. Many business owners and other professionals report that working out of virtual offices makes them more productive.
Cut Overhead Costs
The best way to pay off debt is two-fold: increase revenue and cut expenses. Small business owners can significantly cut costs by decreasing the amount of money that they spend for such expenses as rent, administrative staff, phone service, IT equipment, utilities and other expenses associated with a traditional office. Virtual offices provide all of the important technology and access without all of the associated costs.
If your small business has employees, it is important to select the right people for the job and to retain them. Employee turnover can cost small businesses thousands of dollars a year, which could be better applied to paying off high-interest debt. It can be difficult for small businesses to offer employees some of the coveted benefits that larger employers can, such as high salaries or comprehensive benefit packages. However, small businesses may be able to offer potential employees greater flexibility by having a virtual office. Employees often appreciate the increased flexibility virtual offices provide, along with the ability to save time and money by reducing commuting time. Additionally, virtual offices allow small business owners to connect with qualified employees who may not be geographically close to them but who are the best qualified for the position. Virtual offices allow business owners and employees to work out of these offices as much or as little as desired.
Collect Receivables More Quickly
Even though the amount of your accounts receivable can help make your balance sheet look better, money that other people owe you is not that helpful if it is not liquid. If you have customers that are constantly behind in paying you, establish an automated system to help you collect on this debt more quickly. You may be able to automate this process by using accounting software and sending invoices out of your virtual office by traditional mail or through email.
You may be able to free up some much-needed cash by selling off unnecessary assets. You may have equipment that is obsolete or that you can manage without. You may have a business vehicle that is not necessary or computer equipment that you can get rid of while transitioning to a virtual office.