You, as a small or large business owner, may currently find yourself in a financial position that you never experienced before. Your customer base and your sales are down, but your debt keeps rising and may now be untenable to maintain. You’ve built your business on a solid financial foundation but now, due to circumstances that are out of your control, have to find ways to reduce your debt load. This is where a Daytona Beach business lawyer can help.
There are some basic first steps to take in the process of reducing your business debt.
Examples of some are:
- Take Inventory of Debt: Sort through all your debt considering amounts, interest paid, and monthly payments. Include business loans, loans on equipment, credit card debt, and payables. By doing this, you can prioritize what needs to be paid first and get a clearer picture of how to proceed. Getting professional council from a Florida business attorney can help you immensely in this process. He or she will guide you in formulating a plan that either gets you in the black within 12 months or possibly steer you towards bankruptcy, if necessary.
- Find Ways to Boost Sales: Once you have a repayment plan, look for ways to boost sales, such as rewarding loyal customers, getting more active on your social media marketing, and even tolerably raising prices.
- Loyalty programs are known to be successful in attracting customers and it does work
- Social media marketing is mandatory for the success of today’s business. It may be foreign to you, but your business attorney may steer you to cost-effective companies that can help
- Raising prices may not be your first choice, but by effectively using it (such as a discount on major orders) you may gain and not lose customers. Volume discounts and other creative ideas regarding pricing are proven to please and increase your customer base.
- Cut All Possible Costs: Any viable small (or large) business must watch its costs if it wants to remain profitable. There are most likely hidden costs that you may not even have considered before that can be eliminated. Things like selling off some equipment or stock that is currently not needed and downsizing your office space, which currently is not all being used. Be creative in your ideas since that will give you the best results. Again, your business attorney, as a professional, can help guide you through many of these important steps and how to successfully implement them.
- Refinance Debt and Shorten Payment Plan Terms: Some businesses provide payment terms for their goods or services to their customers. By providing incentives for early payments, shorter terms, and dropping consistently late-paying clients, you may positively increase your cash flow. You can also negotiate with lenders for interest reduction or a change in your payment arrangements, even temporarily.
What are Some Important Facts to Consider When Moving Forward With a Formal Debt Reduction Process?
- Payroll Taxes: Unfortunately, no matter how your business is formed (LLC, General Partnership, etc.), the IRS wants its payroll tax and will also usually hold the owner(s) of the business liable for any unpaid taxes.
- LLC Corporations, Etc.: Your general belief is, that if you’re a Limited Liability Corporation or any other form of a corporate entity, your personal asset base is protected. This protection may have been circumvented though, without you even being aware of it. When a small business owner gets a business loan, the lender requires you to sign a personal guarantee. This could make you and your assets liable for the debt incurred.
- Bankruptcy: If you have been in the red for a while and are now being pursued aggressively by creditors, bankruptcy is a serious step, and all the myriad ways it affects your business must be considered. The types of bankruptcy vary, and only a professional Florida business attorney can get you through this legal process with optimal results for you and your business.
- Whether chapter 7 or 13, bankruptcy does have its advantages, but many outcomes are uncertain, and it may not be suitable for your business. Your asset base may end up being under siege, and creditors could foreclose or repossess their property. It usually will stop all debt collection and can possibly wipe out some of your unsecured debt. Debts on secured assets, such as property, equipment, etc., are a different matter altogether and need to be discussed in detail with your business lawyer.
These are just some points that you and your Orange, Volusia, or Brevard County business law attorney will discuss. Whatever the circumstance you find yourself in, getting the counsel of a business lawyer will guide you in the right direction for you and your business.
Get the Help You Need to Get Your Business Back in the Black
As a small (or large) business owner, seeing your bottom-line plummet and your debts soar can be an overwhelming experience. You may have spent years solidly building your business and have great pride in what you and your employees have accomplished.
The last thing you want to do is start to cut your staff. Payroll is most likely your largest expense, and what most owners look at first. These employees and their families depend on their jobs and that adds to your anxiety. When under this kind of pressure, most are prone to making less-than-optimal and even disastrous decisions.
Make sure you’re doing what’s best for you, your business, and your employees. Consulting with a business attorney can provide you with all the facts regarding your financial, operational, or administrative options. Your business lawyer can help you in an administrative and financial capacity and provide you with the right business path to follow. Don’t gamble with your livelihood and the business you love; get the professional advice you require.