Many small businesses go into debt as they expand. Being in debt can cause many problems in the months and years to come if your business does not do well. You can expand your business without creating debt.
Here’s some great tips for how to expand your business debt-free:
Believe and know that it is possible to run a debt-free business. It’s not the conventional way of doing things and it’s also not as difficult as most people think. As you make decisions to expand debt-free, you will also need to realize that success and growth will happen slower.
If you already have debt, work toward paying it off. Do it gradually and consistently. Pay off all loans, bills, credit card debts and even the mortgage. Celebrate each debt that is paid off as you are one step closer to enjoying the benefits of owning a debt-free business.
Maybe you have always depended on credit cards or a credit line to meet your financial obligations. As you operate your business debt-free, you will need to stash cash to use for emergencies. You don’t want to go back into debt because there’s an unexpected decrease in income or increased expense. Take a courageous step and close the line of credit and credit card accounts. This is the best step you can take to help stop growing in debt.
The goal of a small business is to have 3-4 months operating expenses stashed away for emergencies.
As you grow your business debt-free, you will learn that sometimes you have to wait to purchase. You can never spend more than you are earning and that often means curbing the expenses.
It is often easier to just use a credit card, however the benefits of expanding your business debt-free will outweigh that convenience. Wait until you have saved enough money to buy the things you need. You will know you are not paying interest and credit card fees and you are actually successfully expanding your business debt-free.
Leasing or renting instead of purchasing
Purchasing and adding assets can be a great thing. However, it may not be the right thing for your current business situation. Don’t build debt by purchasing your own property or equipment. Renting whatever is possible will help you keep everything properly maintained and serviced and can save you money. After you have saved enough money to purchase without using credit and you have some money saved for unexpected expenses, discontinue renting or leasing and make the purchase.
If you really don’t want to lease or rent a piece of equipment, consider buying used. You can find gently used equipment without sacrificing quality. This is often a great alternative if you’re trying to live debt-free. Used items can help you get the job done efficiently and keep more money in your business account.
If there’s an item you really prefer new, look for the reduced rates, deals and sales. There are bargains to be found even when purchasing new items.
Bulk purchases can be a bargain if you plan well and don’t purchase more than what you know you will use.
Enjoy expanding your business debt-free
Living debt-free will eliminate a lot of stresses in your business as you expand. If you can stash cash for emergencies and to back you up, you won’t have to be on a constant search for credit lines or investors. Enjoy expanding your business debt-free. Being debt-free is very rewarding.
Hannah Dickins is part of the team behind Directorstats.co.uk. She’s a great believer in people and fiction lover. When not working, she’s travelling the world.