Author
Grahame WardDirector & ASIC Registered Liquidator
(02) 9220 7120
Going into business debt can be very stressful, and there are generally a lot of elements involved. For example, in addition to meeting any monthly repayments to suppliers, you will need to prioritise paying wages, and other employee-related expenses.
If your business debt looks insurmountable, and you become stressed, you may present with physical symptoms such as fatigue and headaches. The good news? There are effective strategies for managing both your stress and your debt to get your business back on track.
What is business debt stress?
Business debt stress starts with feeling as though you are being overwhelmed by your business’ negative finances. The anxiety and stress over your business finances can cause your nervous system to release a flood of stress hormones, such as cortisol and adrenaline. This is generally known as the ‘fight or flight’ state and, while this emergency state can be helpful if you need to respond quickly, prolonged financial stress can have serious consequences for both your health and your business.
7 strategies for managing business debt stress
Your business debt won’t resolve itself, but taking proactive steps can help you regain control. Here are seven ways to manage debt stress and improve your financial situation.
1. Talk to a trusted individual
Business debt stress can be overwhelming and debilitating, so don’t try to confront it on your own. Confide in someone you trust. This could be your partner, a friend, a financial counsellor, or an insolvency expert.
Business debt can feel as though it has a stigma attached to it, which means it can be challenging to discuss. But confiding in someone can relieve the stress and help you get back on track sooner.
2. Take regular breaks and recharge
Avoid becoming obsessed with your business debt. Once you have a plan in place, take regular breaks. This means you can return to the problem with a fresh perspective.
Brisk walking, running or other forms of exercise can help you work off the stress. It may also help you relax and sleep better. Even just taking a break by listening to music or reading a book can help your mental state.
3. Put business debt it into perspective
Most businesses experience significant setbacks¹ at some stage, so put your business debt into perspective. You’re not alone. Although it may feel like there’s no way out, that’s not true. With the right mindset and the help of a supportive network of advisers, you can overcome the problem.
4. Get to know your debt
Taking action to reduce your debt could be the best stress relief of all. You’ll be treating the cause of the stress, not just the symptoms.
The idea of focusing on your debt might seem depressing, but it can be empowering to detail exactly what your business owes and to whom. Work with your accountant or business financial advisor to generate detailed reports.
Once you have a clear picture of what you owe, you can own it by creating an action plan to repay, consolidate, and take charge of your debt.
5. Negotiate with creditors
Get in touch with each creditor and try to negotiate more favourable repayment terms. Be honest and transparent, but have a realistic plan for repayments so you don’t end up making promises you can’t keep. Explain why your business is having problems and ask for favourable terms like a suspension of payments for several months. Give suppliers some peace of mind by putting it into a contract.
If you have a list of creditors to deal with, you could start by prioritising your creditors and addressing the urgent debts first.
Learn more about How to Deal With Creditors.
6. Budget and cut down on expenses
Track your expenses with a detailed budget, and put in place a new business plan for targeting excessive expenses. This could mean finding new ways to save more, or it could involve a drastic change like business restructuring, which you would ideally work with experts to implement.
7. Consolidate your debt
Explore debt consolidation options if you have multiple debts. By combining your loans you could reduce interest and fees, and make your debt easier to manage. Debt consolidation usually involves taking out new financing and using the new loan to repay your old debts. You could end up with a lower monthly repayment amount, making your debt burden more manageable each payment period.
Debt consolidation could offer other benefits, like giving you access to extra features, but make sure you’re not getting further into debt by consolidating your old debt.
You can overcome business debt
If you have mounting business debts, start by realising you can overcome the problem. Proactively manage your mental and physical stress, and develop a plan to tackle your debt as soon as possible. Getting help from the right experts, like insolvency professionals, could help you turn the situation around and achieve the best possible outcome for your business.
Mackay Goodwin is one of Australia’s leading debt advisory specialists, providing tailored debt solutions to help businesses navigate financial difficulties.
References:
https://www.entrepreneur.com/leadership/10-reasons-why-7-out-of-10-businesses-fail-within-10-years/299522
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