Did you know that the average small business owner has around $200,000 of debt?
Although some debt is a necessary part of doing business, too much of it can create a lot of problems.
Do you want to better understand how debt impacts businesses? Keep reading to learn about 11 ways your small business debt could be sabotaging your short-term and long-term success.
1. Small Business Debt Can Lower Your Credit Score
Credit scores are the heart of finances. If you aren’t establishing a business line of credit responsibly, your credit score will start to decrease. If your number gets too low, you’ll have much fewer opportunities to advance your business in the future.
2. You May Put Some of Your Debt onto Personal Credit Lines
Some people who max out their business credit cards get desperate and start charging their expenses on personal lines. The more your business crosses into your personal life, the more it can haunt you if conditions continue to get worse.
3. Vendors Might Not Want to Work with You
Vendors are running their own business as well, which means they only want to invest in businesses that can always pay. If they investigate your credit score, they could turn you away because you seem risky.
4. You Could Lose Employees
There are plenty of reasons why debt can hurt your employees. You may have to fire people to cut your expenses or some people may quit if you reduce their pay and benefits.
5. Debt Can Force Businesses to Move
Location is crucial for increasing foot traffic and attracting repeat customers. If you have to relocate to a smaller or less accessible space, you may not be able to pay off your debts.
6. You Won’t Have the Resources to Market to New Customers
Marketing can help you reach new customers and build a larger, loyal audience. If your business has too much debt, you may not have the resources to develop effective marketing strategies.
7. Your Service or Product Quality Could Suffer
If you need business debt help, you might be tempted into cutting every possible corner. If the quality of your service or products suffers as a result of this trimming, you’ll lose even more money.
8. Your Business Won’t Have as Many Financing Options
Having steady financial support from lenders is the key to long-term success. If your records show that you aren’t a reliable business owner, you won’t have access to fair financing options.
9. You Won’t Be Able to Utilize Your Full Talent
If you’re too busy focusing on tackling your debt, you won’t have the time to do other important tasks that can help your business grow. The best businesses are run by people who use their unique talents to their full potential.
10. Debt Creates Stress and Clouds Judgements
Debt has a way of interfering with every decision you make as a small business owner. If you start making the wrong decisions because you’re afraid of your debt, you might not be able to defeat it.
11. Unchecked Debt May Tempt You to Quit for Good
Debt can take a huge toll on anyone. If you can’t figure out a smarter way to manage your finances, you may have to cut your losses and shut down your business permanently.
Do You Need Help Getting Rid of Business Debt?
Now that you understand the risks of small business debt, you can start creating a smarter financial plan that will allow your business to succeed.
If you need help figuring out how to get out of business debt, Dealstruck is here to support you. Our company is dedicated to providing small businesses with fair financing options. Contact us to learn more about our services.