Enterprise

Weighed down by debts? Learn to cope without losing business

debt

Financial stress over big debts can cause anxiety and depression. PHOTO | FILE

Last week we read that self-financing is the best way to avoid cash flow problems when growing a business.

Managing debts should be a priority but most businesses inevitably get stuck in debts due to multiple factors, some of which cannot be avoided.

According to a research by Gallup, a research-based global performance management consulting company, 49 per cent of small business owners find it extremely difficult to manage their current debt.

Many small business owners are wreaking havoc on their health and risking plunging their business into crisis by failing to manage debts.

The first signal that things are falling apart include insistent calls from suppliers whose debts are long overdue, a call from your banker to deposit money in your account to avoid cheque being returned and struggling to clear areas of your bills.

You are no longer at ease to operate your business optimally when you start spending most of your time looking for loans to pay pressing debts.

Learning how to manage debts in a business is one of the key skills that every business manager should learn as a matter of survival. This is not easy but it is possible to an appreciable degree.

First develop a positive debt-fighting attitude. As it has been said, tough times do not last but tough people do.

Author Ken Thomson correctly observes that, “debt represents a fundamental obligation to do everything possible to honour the commitment another firm has made to yours, by supplying goods and services, for which you promised to pay. As an honest individual, you want to make sure that your firm responds in a way in which this promise is honoured.”

Irrespective of incessant call and threatening letters from creditors, you should not let feeling of guilt paralyse you to a point where you cannot work well.

Ken Thomson further advice is, “Use the same mindset as that of a Fortune 500 company CEO. Your primary responsibility is to your team and investors and the continuing survival of your organisation. The immediate needs of creditors are, of brutal necessity, secondary to this.”

Continually pay what you can and avoid the disaster of paying your creditors all the money and fail to meet survival needs of your business such as paying staff and utility bills. This does not help either party in the long run.

Secondly avoid worrying too much. There are no accurate words to describe to someone the worry and fear that goes through the mind of a person who has a debt-ridden business, unless they have been through it themselves.

Magazines and newspapers almost always write about people who are doing very well in business. They paint a rosy picture of entrepreneurial pursuits and make those suffering feel they are odd out.

You will hardly read the stories of people who living in desperation, struggling to pay debts, staff and utility bills to stay afloat.

Most successful entrepreneurs have been almost crippled by debts at some point in time. Knowing that you are not alone and that worry does not solve any problem is quite relieving. It helps you cool down, develop practical ways to calm creditors and get breathing space and figure out how to turn things around.

Share your predicament with others and if possible seek advice of a trusted business coach or advisor rather than from your friends who have never had similar experience.

Mr Kiunga is a business trainer and the author of The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market. [email protected]