Let me be brutally honest to tell you that you have to pay back your debt at the end of the day, month or whatever timespan you got. Nonetheless, you must have heard of the saying that “money makes money”. If you are someone who wishes to run a start-up or a small enterprise owner who wants to scale-up your business, debt is a necessary evil. It is as simple as that ‘you need money to make more money’. 

However, no business wants to be debt-ridden for a long time. As a business owner, you need to open up and change the way debt is considered traditionally.

Here are a few tips regarding how you can mold debt & paybacks and make it work for you:

Tips On How To Mold Debt & Paybacks

Keep a check of your credit health: 

Whether the amount of debt is small or large, always try to maintain your credit report. This habit will have a long term effect in your professional as well as personal life especially in case you need any loan in the future. Most of us think money as a result of performing any task or duty. It’s like the end goal of the time we spent in any particular work. Very rarely, we treat it as a “tool”. A tool that can assist us in making more money. Keeping a check of your credit will allow you to segregate the debt between what you have as “expense” and how much can be used as “tool”. 

Also Read: Indifi Technologies Aims To Bridge The $380bn GAP In SME Debt Financing

Focus on Solutions Not Problems: 

If you are considering borrowing loans, there must be some business needs that you must fulfil. So, instead of focusing on problems like debt and return, you should give more attention to the solutions that money will create. It is a basic human approach to not be problem-oriented but solution-oriented. 

Say, the money you borrow will be used in buying new equipment or software or hiring new resources for your business, it ultimately will enhance your efficiency and generate more revenue. Many financial advisors also suggest setting up an automatic debit payback plan and focus on savings, prosperity, and growth.

Also Read: Debt Or Equity: Find Out What’s Best For Financing A Company

Don’t be emotional about money:

In general, there is a negative sentiment regarding debt or in a broad sense, of money. So much that it is considered to be a source of stress. If you are someone having this thinking, I will suggest you first realign your priorities. Money should never be the centre of life. It is an important need to sustain life but it is not life. 

As I earlier stated, treat money just as a tool and make it work for you and not the other way around. On top of that, in making critical judgments for your business, you need to be a free, innovative and liberal thinker, not an emotional one. 

Also Read: How To Immunise Yourself To Inflation

Effective utilization of debt:

For any business, the end goals always comprise of making profits and expansion. In order to achieve that, you should first decide how to put the debt in use effectively. Make a proper assessment of your plans and focus on things like the risk involved, probable setbacks, market fluctuations, probable outcomes, etc. 

Making a budget for these things will help you a lot. It will allow you to assess your probable payback amount and savings after a specified period. In the case of small businesses or start-ups, always keep the inventory running. You don’t want to own goods that might be used 3 or 4 months later. In today’s time when you can always order stuff online and get delivered in a day or two, stocking should be avoided. It will not only consume your monetary resources but also storage space.

Also Read: Best Accounting Practices For Small Businesses?

Avoid being too Dreamy:

People start their business or start-up with a lot of motivation but a little amount of experience. In most of the cases, after receiving initial investments, they wind up in debt because of spending higher than earning. We all face these issues on a personal level. It’s the sole reason why credit cards are so popular. At a personal level, it seems justified. In the case of enterprises, it is toxic. Always try to make your business self-sustaining. Before approving any loans, the creditor will go through your revenue model besides your credit score. So, keep a check on unnecessary spending.

Coming back on the issue of debt and its return, if you are starting out your business, money is of utmost importance. At the same time, utilize it wisely so that it becomes an asset rather than a liability. Indifi, one of the leading names in the business, is a technology platform that ensures the success of small businesses by providing them with the know-how to run a profitable business.

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