The decision to pull your business out of a serious debt crisis is a critical one. It requires courage and personal commitment. While many people are willing to offset business debts, they fail to achieve that due to certain gross mistakes. In such a critical moment when one needs to make rational decisions, people end up plunging deeper into financial woes by embracing certain erroneous ideas. Here are some mistakes you need to avoid when settling debts.
1. Trying to handle debts on their own
When it comes to business debts, many people are reluctant to seek help. Instead of seeking the intervention of their associates or professionals, they choose to handle things on their own. It only dawns on them that they require external support when so much water has passed under the bridge. To save your business, one should be able to assess the need for assistance and call a non-profit debt counseling agency to advise them on the way forward. After consultations, they can suggest debt settlement, debt consolidation or any other viable debt relief solution for your business.
2. Blindly signing up for debt relief programs
It is agreeable that various Creditors relief programs come handy when one is faced with a debt crisis. However, simply jumping into something you have not explored is not healthy for your business. For one, it is important to note that most debt relief programs take 3-5 years. As such, there is need for patience. Secondly, there is need to consider the reputation of the company you are tasking with the mandate of handling your financial woes. Review sites such as Better Business Bureau can come handy in assessing the credibility of such companies. What is their rating? What do previous clients say about them?
3. Failing to have a practical budget
It is very difficult to control businesses finances without a budget. Most small business owners think drafting and strictly adhering to a stipulated budget is too hectic and somehow unnecessary for their businesses. They only realize how deep their messes are when they cannot settle their debts and their business are on the brink of collapsing. When settling business debts, it is advisable that you have a budget indicating how much you will be setting aside for the loans even as you focus on other aspects.
4. Failing to prioritize debt settlement
Each business has utility bills to settle. Most people understand how important and urgent those bills are. Consequently, they shift their focus to ensuring the bills are settled promptly and fail to prioritize debt settlement. That is a recipe for disaster. Some businesses with multiple loans make it even worse by concentrating on some loans while ignoring others. Settling your debts is important. At any point, you should have all your loans under control. If it appears overwhelming, it may be necessary to involve third parties. There are, at this stage, still a few options. These include, as an example, filing consumer proposal information as a way of writing off debt without going bankrupt. Knowing your choices allows you to make the decision that is best for you.
It is not fair to lose your small enterprise to creditors. However, this often happens to many businesses that ignore simple advice and make the same mistakes repeatedly.