5 tips for growing a debt-free small business

By Michael Deane

Starting a business is a dream that most often comes with a huge debt. Most entrepreneurs need a loan to get started, hire staff, and later to grow their businesses as well.

For many small business owners, debt is simply part of life. You need to borrow money to make money. But if it accumulates, debt can also ruin you. It’s especially tricky if you’re new to running a business and have no emergency plan in place.

But is it possible to grow a debt-free small business?

It’s quite difficult, that’s certain. But it isn’t impossible.

Define your priorities

To get rid of your debts, you must think about your priorities. Do you have overdue bills? Have you taken a high-interest loan? You should first tackle the high-priority debt before you move on to other, less urgent ones.

Try to pay off more than you have to each month, if possible, of course. If your other debts are a bit more flexible (as in you can be late with your payments), then prioritize your most urgent debt and pay as much as you can every month.

The sooner you get rid of your biggest debt, the sooner you can start paying off your other loans.

Cut costs

Try to reduce your expenses wherever possible. Don’t apply for a loan to get new office equipment if you don’t really need it. Think about how much money you’re spending on everything and whether you’re financing some unnecessary expenses.

Perhaps it was the fact you were accumulating these unnecessary costs that got you into debt.

Think about ways you can cut your costs. Perhaps there is some office inventory you don’t need that you can sell. Are you paying any fees for systems you don’t really use? Could you possibly move to a smaller office space and save on rent?

Also, pay your taxes on time to avoid fines and take advantage of tax reliefs.

You can outsource certain services instead of hiring full-time staff too. These apparently small things may add up to a sizeable amount that you can save and use to invest in the growth of your business instead.

Focus on sales

Needless to say, to grow a debt-free business, you must focus on boosting sales. Think of ways to reach new customers and encourage them to purchase your products or services. You can offer limited discounts to loyal customers, offer coupons, etc.

Acquiring new customers is said to be costlier than retaining loyal ones. Actually, it costs about five times more to acquire a new customer to be more precise. Take this into consideration and work on ways to retain customers. Introduce a loyalty program, make personalized offers, etc.

The more money you generate through sales, the faster you can repay your debts and grow a debt-free business.

Establish an emergency fund

The reason why many small businesses fail within a few years of inception is the fact they’re unprepared for a crisis. Inexperienced entrepreneurs often get a loan and spend money on fancy new equipment, expensive office space, etc., but forget to leave some money on the side for emergencies.

Therefore, when a crisis emerges, they lack the cash to handle the situation. They drain all their funds trying to recover and end up penniless. Unfortunately, most businesses never recover.

But you can avoid this dreadful fate if you prepare yourself for an unexpected (but still expected) situation. Set up an emergency fund. In this way, when you encounter a crisis, you won’t need another loan leaving you with even more debt than before.

You will be able to overcome the hardship without serious consequences and you will be able to continue growing your business without plunging into debt.

Stick to the budget

To avoid debt, it is of utmost importance that you create a budget and stick to it. You have probably heard this before but the reason it is so frequently emphasized is that it really is crucial for business growth.

A budget gives you direction. When working on your budget, try to be as detailed as possible. You will need to invest some time into it but it will save you the trouble later. Monitor how much money you spend and how much you generate each month. Know exactly how well you’re doing.

A fixed budget will help you stay on track with your repayments. It will also prevent you from spending more money than planned/necessary for various things.

Final word

Becoming a debt-free entrepreneur is possible but it takes strategy and discipline. If you reduce your costs, boost sales, and closely follow the budget you carefully planned, the growth of your business will become inevitable. More importantly, you will have peace of mind knowing that you’re debt-free.


Michael Deane has been working in marketing for almost a decade and has worked with a large range of clients, which has made him knowledgeable on many different subjects. He has recently rediscovered a passion for writing and hopes to make it a daily habit. You can read more of Michael’s work at Qeedle.

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