Owning a small business can be a very complex and overwhelming responsibility, and if you have debts mounting then your financial accounts may feel like they are about to crash down on you. What can start as a small debt can spiral out of control, as interest rates soar and you find profits dwindling. This may even result in the close of your business if you are not careful.
Reduce your overheads from an early stage
To avoid any future problems with your business, you should make sure that you reduce any overheads from an early stage of your business setup. This could include your workspace, which you may choose to run virtually rather than owning or hiring an office building.
You may also want to reduce the amount of equipment that you own, or perhaps want to reduce your marketing budget.
These cuts can really keep costs down and ensure that in the early stages of your business, your financial accounts do not weigh you down.
Try and establish good credit control practices
If you establish a strong account team, that track payments and ensure that clients pay on time, you can help to avoid any negative cash flow and build your business up slowly. If you have trouble with a particular customer month after month, perhaps it is best that you cut your ties with this client rather than trying to get them to pay your invoices every month.
If you find that your invoices are stacking up, then give your clients an ultimatum, if they do not pay, you refuse to do any further business with them.
Don’t be afraid to raise your prices
It can be a difficult decision to raise your prices, as you do not want to price yourself out of competition. However, you can raise your prices strategically. If you raise them slowly, rather than suddenly doubling the price, this can give you a manageable option which allows you to profit accordingly.
Make sure that you choose the right time to raise your prices. For example, you might want to decide on a slight rise in price just before the Christmas sales come in, when you know that people will be prepared to spend the money.