Many individuals wish to own a small business. If you’re living this dream, be careful with borrowing money when funding your business operations. According to the U.S. Courts, 31,671 cases were filed for business bankruptcy from March 2013 to March 2014. Debt is an important tool for business owners, but using debt efficiently is important to understand.
AOG Wealth Management, a team of wealth management specialists serving Great Falls, Reston, Potomac, Maryland and the surrounding Northern Virginia area, wants to help you succeed in your business. Here are some ways you can benefit from efficient debt management:
For some businesses, filing for bankruptcy—particularly Chapter 11—may be an appropriate option.
When you file for Chapter 11 bankruptcy, your creditors, trustees, and the court will supervise your business operation. You may not be allowed to borrow working capital. If you are, it may be limited. Furthermore, you have to meet many requirements for bank accounts, taxes, operations, and insurance. You may end up focusing on meeting these requirements instead of actually restructuring your business.
You can avoid Chapter 11 headaches by managing your debt efficiently from the start. If you find yourself knee-deep in debt, consider consulting wealth management experts to know if bankruptcy is an appropriate option for your business.
Maintain a Strong Financial Reputation
A strong financial reputation results in an easier time to get loans. Keep the lines of communication open with your lenders, especially when it comes to your business’ finances. Lenders commonly work with their clients to help with challenging financial situations so the sooner you inform them of your situation, the sooner you’ll receive assistance from them. It is in both party’s interest to help solve any financial predicament. They may be able to restructure your payments or reduce your interest rate.
Efficient debt management protects your financial reputation.
When you handle debt properly, your investors or business partners will trust you more with their money. This is particularly beneficial if you’re experiencing a financial bump in the road. Lending partners may be more likely to help you ride out any temporary financial challenges.
To save the business, you may think about cutting costs and offering price markdowns. You should also consider contacting your suppliers to ask for deferred payment plans or discounts. Show your partners that you’re actively looking for ways to increase revenue to pay off debts.
Debt management doesn’t have to be complicated, and you shouldn’t have to do it alone. At AOG Wealth Management, our Reston and NOVA wealth management experts are always ready to help you. With over 100 years of combined experience, our specialists can help you create a financial management plan and find ways to improve your debt management. Call us or fill out our contact form for a complimentary consultation.