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7 Strategies to Successfully Manage Your Debt


Managing debt is a necessary and important aspect of running your day-to-day small business. There are certainly good types of debt, however debt requires your frequent and regular attention. As a small business owner, controlling your debt is fundamental to your business success. If done optimally your business will benefit and if not, debt could become an issue. After researching various strategies and tactics for managing small business debt, we’ve compiled a list of 7 small business debt management strategies that could work for you:

1) Have a plan & do your research

As a small business owner, it’s of utmost importance that you keep close watch of your finances. This includes knowing the ins and outs of your business; the financial position you’d like to be in and the steps needed to get there. Small business loans can be a great source of capital if you develop a budget and have a plan for repayment. Understanding the differences between good debt and bad debt is key to knowing your business needs and whether a small business loan is right for you. Split your spending into primary areas that need more focus, and those that are secondary. After doing this, you’ll know which debts you should pay off first and which pose less of an immediate threat to your business.

2) Pay attention to current and future terms and interest rates

Before assuming any debt, your first step is understanding exactly how it works and having the foresight to see how they will affect your business in the future. Seek out better alternatives if you find yourself stuck in debt with unfavourable terms. Shop around! Look up and compare interest rates and consider those that are most suited and favourable to your business. It’s important that you know how interest rates can affect you. For example, if you borrow using a variable interest rate your loan will adjust depending on market rates – you will need to decide if your business has an appetite for that level of risk.

3) Improve cash flow management to anticipate payments

Once you identify your debt and have a budget in place, you should be able to allocate cash flow to paying off your debt. Improving cash flow requires measurement and forecasting, improving management of payables and receivables, and being prepared for shortfalls. These strategies aren’t necessarily solutions, but they provide opportunity for relief of some of the risk for your business that comes with debt.

Cutting costs is another strategy to improve cash flow. The less cash that goes out, the more goes towards paying off your debt. It seems like a pretty simple equation. As a small business owner, you need to be objective in terms of which spending is most important to your business, and where it can be cut back. Once your cash flow increases, a good strategy is to prioritize your payments in order to clear the highest-risk loans which are also those with high interest payments.

4) Consider debt consolidation

When utilized well, debt consolidation is a great strategy to make small business debt more manageable, and help gain better control of your finances. Rather than paying all of your loans separately, consolidating them into a debt-consolidation loan provides a lower interest rate and less time spent paying bills. Debt consolidation is an option best approached with the guidance of a financial advisor – consult one if you’re considering it.

Additionally, an online small business loan is a great resource for this purpose. Services such as Lendified offer customizable terms and quick and easy approval to free up cash flow for your debt. Applying for a new loan is another level of risk that should be approached carefully. Consider this option for debt repayment only if the circumstances allow for it.

5) Evaluate your working space

Excess space can also be an option for saving money. Take a look around your office – are there changes you could make? Is it as efficient as it can be? If you have excess space, consider lending it out or selling to increase cash flow to pay off your debts and loans.

6) Negotiate with suppliers

Another option to manage your debt is to be aware of the money in your accounts payable. You may be able to negotiate expenses with current suppliers in order to cut costs and allocate money elsewhere. Common options available to you are to seek different terms for length of payment from your suppliers or inquire about early payment discounts. Both are common practice by creditors. Maximizing cost efficiency here is a great way to ensure that your small business is getting the best return possible.

Additionally, being knowledgeable and aware of the supplier marketplace is a great strategy for you as a business owner. Be on the lookout for better deals – maximize every dollar spent by getting the best rates for the goods and services your business requires to operate.

7) Seek counsel if needed

You don’t have to confront your small business debt alone. Loan services like Lendified are great resources for those who effectively use some of strategies mentioned in this article. There are also a number of staff available to you including small business consultants, accountants, credit counselors, financial planners, HR consultants, and more. All of these resources are available to help you make smart business decisions.

Tackling your debt is a key part of running a small business, but it doesn’t have to be a major concern for you. There are good and bad reasons to obtain funding and the strategies you employ are fundamental to your financial success. The 7 we’ve mentioned above are a great start for managing your debt.

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About the Author



Lendified is Canada's premier online lender for small businesses. The company was founded by former bank executives dedicated to provide businesses with fast, easy, and affordable financing. The Lendified team regularly produces blogs and guides to help small business owners succeed.

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