Tips to help your home care business avoid bankruptcy and become more solvent
Here are several things to remember to keep the business running smoothly:
- Cut unnecessary costs and free up cash
Identify the parts of the business that got the company into debt in the first place and attack them head on. Cash flow, after all, is the key to any business. If customers aren’t paying on time or your expenses are too high, consider ramping up collections efforts and ditching unnecessary expenses such as office space or costly phone systems. Another way to free up cash: Sell off unused equipment or scrap. - Revisit the budget
If the debt keeps piling up, then it probably means the company’s current budget needs to be examined more closely. Create a budget based on the business’s current financial situation. Make sure your business’s revenues can more than cover your fixed monthly costs like rent and utility bills. Then, allot a portion of the budget for variable costs, such as materials. As a rule, business owners should devote much of what’s left after expenses to paying down their debts. If you have credit-card debt, for example, make sure you pay off more than just the minimum. Otherwise, your debt will keep building and it’ll take years to pay off. - Prioritize debt payments
Tackle the business’s highest-interest rate debt first. Most likely that will mean concentrating your energies on paying down credit cards. However, if you’ve personally guaranteed any of your business’s debt – meaning if a creditor or supplier can come after your personal assets if you default –make sure paying off those debts becomes a high priority. - Speak with creditors
Tell your creditors the financial situation you’re in and the hardship the business is going through and see if they have a hardship plan that may provide better payment terms. If the creditor doesn’t offer one, request a payment plan or a reduced settlement amount. Make it clear – without being demanding – that the less they’re willing to accept or the more they’re willing to reduce your debt, the faster you will pay them (as long as you can fulfill your end of the bargain). The worst thing a business owner can do is set up a repayment plan with a creditor and default. - Consolidate your loans
Consolidating your loans into one payment allows you to reduce monthly costs without harming your credit. The best-case scenario is consolidating several shorter-term loans into one long-term package. - Seek Counsel
Negotiating with creditors can be a harrowing experience. If creditors are hounding you, enlist the help of a credit counseling organization. While these nonprofit organizations typically offer debt-management help only to consumers, some will work with small-business owners.
Submitted by: David Goodman, President Companion Connection Senior Care, the leading “no royalty” membership organization serving the non medical home care & licensed home health business communities. The need for home based senior care is soaring! We will help you start your own highly successful Home Care Agency business. Earn an excellent income while helping others with their activities of daily living. Contact us today for your FREE Business Info Kit… 1-800-270-6949