Do Or Debt: 5 Quick Tips To Get Away From Bad Business Debt
Planning to start your own business venture? Well, here’s a toast to your new chapter. And if you have just started your business, here’s a high five for finally having your baby investment.
Now, for most start-ups, business debts are one of the responsibilities that you as the owner or partner handle. Business debts are the loans that you borrow from a money-lending institution, the credits you get from your suppliers or basically, any “money that your business owes.”
A business debt can either be your best friend or your worst enemy. If you know how to take advantage and manage your business debts, then you’re in for a treat, otherwise a bad business debt means a bad rep. And that’s what you want to avoid at all cost.
To get away with bad business debts, here are quick tips that you need to consider to keep your business up and going.
Quick Tip 1: Firmly review your business loan plans.
Your business is doing fine, and you see that sales are good and you begin to entertain your thoughts of an expansion or improvement and you feel like that should be your baby investment’s next step, hold on, just wait, if you are still a small business, figure things out first.
Although you believe that the greater the risk, the higher the reward, as the captain of your ship, carefully assess whether your sales can sustain another business loan, especially if you haven’t settled your previous loan. You don’t want to pay the price for your business blunder. Think it hard and think it through before taking the risk. If you studied that the pros outweigh the cons, then you may opt for an additional loan.
Quick Tip 2: Good sales don’t equate to more spending.
Finally, your small business is paying back the hard work you’ve rendered. The salary you earn from your 9-5 jobs just quadrupled because of your entrepreneurial decision to be your own boss, and now you feel like the cash is a reward worth spending. But that’s where you should stop!
Most Filipino small businessmen especially for the newbies feel overwhelmed with the money they just received, they usually go and spend without even having to go on a full-year to study their business sales patterns. It is a good idea to follow the practice of our fellow Chinoy businessmen. Apply the Kurot principle or Pinch principle. When you gained your first profit, don’t get a handful, rather add it up to your business capital and continue to do that. Make a target goal, and unless it’s for emergencies, don’t touch your profit. It feels rewarding at the end of it all. Take Warren Buffett’s number one rule:
“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”
Quick Tip 3: Go on a year-long sales observation of your business.
For those starting up in a small business, expect that there are good days and bad days and it’s the bad days that you want to watch out for. To do so, it is best to observe the sales pattern of your shop for a year. The sales you have on January would be different in the next four months. Finding out the lean months of your business would really help you plan out strategies to keep the average monthly sales afloat or better surpass it.
Quick Tip 4: Secure a budget plan for your business.
This the time you bring out the OC in you. You need to create your business budget plan. A budget plan is like the financial blueprint of your business. You need to determine the monthly fixed cost for your manpower, supplies, and other things. Having a budget plan can help you keep an eye of the expenses and gains of your business. This way, you can avoid getting financial loopholes from occurring. You can keep savings, have a budget for expenses, and manage to make your business income grow. As how the old folks would say,
“When you fail to prepare, you prepare to fail.”
Quick Tip 5: Increase your business income.
Business is good when cash flow is high. To do so, start by making effective marketing strategies. Take absolute advantage of available marketing tools such as the social media, and you can never go wrong with the power of the word of mouth especially for a young business.
In any case you need extra cash to help your business get by, you could always turn to PawnHero for a financial back-up plan. Just visit the PawnHero website to learn more. You could also download the PawnHero app. Plus, if you need computers or screen monitors for your business, PawnHero offers such at its online shop, Marketplace by Pawnhero, where authentic pre-loved branded items meet bargain prices.
Don’t forget to like PawnHero Philippines and Marketplace by PawnHero on Facebook.
If you got any business tips, feel free to share in the comments section below.