Imagine what would be possible if you and your business were debt-free. Imagine knowing you had the money in the bank you needed. You’d be able to pay yourself, your employees, your expenses, and your taxes, or to make that big purchase that would enable your business to grow without putting yourself in the hole. Imagine how much simpler and stress-free your life would be!
Debt is the one thing that consistently keeps business owners up at night. Slow sales cycles and fear of losing it all are concerns many small business owners face at one time or another. There are also times when sales may be fine but customers are slow to pay, which in turn creates problems with you paying your bills on time. The (seemingly) simple answer has always been to have a line of credit available to cover those slow times. But we all know what happens when slow times crash head-on with the expense of carrying debt to cover those slow times or carrying a large debt for expansion.
The National Small Business Association conducted a study in 2012 which highlighted another reason why taking on business debt is so troubling. Here’s an excerpt from their findings:
“Nearly one in three (29 percent) small-business respondents report that, in the last four years, their loans or lines of credit were reduced. Perhaps even more concerning – nearly one in 10 had their loans or lines of credit called in early by the bank. Among those whose loan or line of credit was called in early, 19 percent were given less than 15 days.
Given that the average balance on a loan or line of credit is $256,060, 15 days is a death sentence for most small businesses. Adding insult to injury, 60 percent of those who reported changes to their loans or lines of credit stated that the reason was due to the bank’s internal risk assessment, and 15 percent weren’t even given a reason.”
That’s enough to strike fear into the heart of any small business owner who believes carrying debt is the way to go! Can you imagine what would happen to your business if your creditors suddenly decided they wanted their money and you had 15 days to pay up in full?
Maybe it’s time to implement a new strategy! Maybe it’s time to put you and your business on a solid foundation of financial health that builds your wealth and financial security.
Even if your business is buried in lines of credit, loans, and IOUs to vendors, there is a way to get out from under all that debt and become flush, as opposed to cash poor. I won’t pretend it’s easy, but it is simple. It just requires a plan and some discipline. But just imagine how it would feel to not owe anyone anything!
Here are the broad strokes of how you accomplish “debt destruction” for your business, but it works for your personal debt too.
#1 – Know how much you owe! Make a list of all your debts.
#2 – List your debts from smallest to largest – a spreadsheet works great for this! (I have one I provide for my clients to help with this step.)
#3 – Now list the minimum amounts that are required for each next to the credit card, etc.
#4 – Now list the amounts you’ve been paying each month next to each credit card, etc. in the next column.
#5 – Now make a decision to start knocking down that lowest balance using the “extra amount” you’re paying over the minimum for each debt. In other words, figure out how much you’re paying over minimum for each and apply that amount to the debt with the lowest balance until that balance is gone. Pay that minimum amount on the others.
Once you pay off that balance, go to the next lowest balance and systematically pay it off. By doing this, your “output” for making these payments will stay the same, but you will be knocking out your debts, one-by-one, until you’re free and clear.
This is all part of a bigger system, The Miracle Money Method, which creates financial stability and profitability for businesses. But if you really want to experience how good running a debt-free business feels, this is a great place to start! You may even be surprised by how quickly this can be accomplished. You’ll also be surprised at how freeing it is to know the debt is gone and no longer hanging over your head like a boulder ready to drop. It changes the game – in your favor!
If you have questions or would like to find out more about The Miracle Money Method, just click here or contact me. I’d be happy to speak with you personally. And here’s to strong foundations and financially healthy businesses!!