While you don’t necessarily want to avoid all debt in your business, as there is such a thing as good debt, the vast majority of debt you really don’t need and. Let’s take a closer look at what you should be doing.
Come up with a budget
One of the main reasons why many businesses end up with too much debt is because they never have any kind of budget in place. This leads to spending, spending, and more spending, without any kind of thought towards can we really afford this and is this the right thing to do? Take the time to come up with a sensible budget and then stick to it.
Buying equipment on credit
Buy now and pay later is one of the easiest ways to get in a lot of debt. For example, when buying equipment like gas abatement systems it’s easy to start buying in bulk when you can’t really afford it. Then 6 months down the line the invoices need paying and you just don’t have the cash.
Get a good accountant
If you don’t consider yourself much of a numbers person, then you should quickly bring someone in who is. Usually, this comes in the form of a good accountant, who can delve into the numbers and let you know what you can and can’t afford. The next best option is accounting software, although the right accountant will pay for themselves in the long run.
Be careful about employing staff
Taking on staff is necessary to take the business forward, because at the end of the day you can’t do everything. However, employing full-time staff is a major commitment, and if you’re initially paying them from loans and credit cards, it’s a surefire way to go broke.
That’s why our experts recommend you outsource to freelancers or take on temporary staff at first. Sure, it might cost a bit more, but you don’t have any contract, which means if the work slows down you won’t have to keep paying them.
Keep it simple
Most people end up buying things their business really doesn’t need, and this is why the debt starts to get out of control. Do you really need an expensive car, or to upgrade to a bigger office, or to buy new computers? Keep it simple until you can comfortably afford to buy new things with money you have sitting in the bank.