Navigating business debt can be challenging, with so many debt relief solutions floating around and not knowing which is going to be the ultimate solution for you. What should you do when a beautiful, well-thought-out dream suddenly turns into a nightmare? More importantly, how can you avoid the nightmare all together?
Please continue reading to discover the ten crucial questions to consider before making the final decision of whether to take on new credit for your business or not.
The Dream:Creating your brand and establishing a sustainable business that brings in a good income is all about ensuring the well-being of yourself, your family, your team, and your customers. So, at the beginning, everything seems to be going well.
Navigating Business DebtAs you’re growing your business, things start to take off. Then, one day, you realise you have a bit of extra cash on hand. Your accountant suggests that you should buy a vehicle. Just like that, you end up signing your first credit agreement in the business's name, alongside your usual expenses like rent and phone bills and salaries. Learning how to navigate business debt responsibly can be quite a challenge.
TIPS ON NAVIGATING BUSINESS DEBTBuilding a reserve fund:Just like any other business, it’s crucial to keep in mind that even if things are going great right now, unexpected challenges can arise. Starting to build a reserve fund from day one can really help you manage any potential debt down the line. Having that buffer will be crucial if you ever find yourself in a situation where you don't have enough money to cover your monthly expenses.
Make the smart move and create a reserve fund Creating a reserve fund is a smart move because it gives you a backup plan for those unexpected expenses. Consider how the COVID pandemic caught many unprepared, highlighting the importance of having an emergency fund. Your reserve fund can never be too big! Even if you start small, it’ll keep growing as you set aside money each month.
What about curbing your tax rebates?As your business begins to flourish and you notice those profits rolling in, your auditor will probably suggest that you consider investing in a vehicle, property, or something along those lines that aligns with your business to help you manage tax rebates effectively. It's exciting to experience the growth of your business, but it also comes with great responsibility. Sometimes, new business owners can get a little too excited and end up stretching themselves financially.
HOW TO DECIDE WHICH DEBTS TO TAKE ON OR AVOID?
This is a question that generates different responses depending on the business in question.
Ten questions to consider when making decisions about business debt:1. What is the purpose of acquiring this item and service?
2. Is it essential for you to continue conducting business, or can you manage to operate without it?
3. Is this service or item(s) necessary right now, or can it be postponed?
4. If it isn't necessary right away, what is your motivation for wanting it, and how will it enhance your business?
5. Will this item or service enhance the volumes you're currently handling in your business?
6. What are the terms of the credit agreement, more importantly, interest rates, payment terms, suretyships, etc.?
7. Is this a fixed expense, monthly, or would it be possible to settle the account at your earliest convenience?
8. The most crucial question to consider: how will this extra expense impact your existing monthly income?
9. Are you able to manage the monthly payments for this debt, alongside your existing responsibilities, including the amounts paid to the reserve fund?
10. Ultimately, is there a way to access this service or product without entering into a credit agreement?
By addressing the questions outlined above, you can assess the urgency and necessity of the credit agreement, thereby minimising unnecessary expenses and safeguarding the financial health of your business.
You've been going through everything you've done wrong, but hey, don't worry about it. There’s always a way to tackle any issue, and yours isn’t too tough to handle.
CURE DEBT
Your NCR-accredited debt expert is here to help with debt issues, whether they're big or small, for businesses and their owners on a personal level. So, what's next? I really messed up—how can I bounce back from this awful situation with business debt and start living a debt-free life now that my dreams feel like they’ve fallen apart?
You're definitely not the first business owner to face financial trouble, and you certainly won't be the last one either.
In South African law, there are a myriad of solutions out there. The tricky part is figuring out which one suits you best, especially when it comes to your finances.
That’s where Cure Debt steps in to help you. We're here to help you navigate business and personal debt by offering you a clear understanding of the various debt relief options out there, along with their pros and cons. This way, you can make an informed decision about your finances, whether it's for your business, personal finances, or both.
The best part of this service is that evaluating your financial situation, whether it's business debt, personal debt, or both, it is free.
Helping you make an informed decision is our passion. Making the right choice from the start can determine whether you experience immediate debt relief or prolonged financial suffering.
Cure Debt: We know and understand that facing financial difficulties can be challenging and extremely traumatic, but we are passionate about helping you become debt-free.
