Every business owner struggles with competing priorities in a bid to keep their enterprise afloat in the increasingly complex world that is modern business. Not only are they keeping on top of cash flow needs, chasing bad debts, responding to customer demands, fending off competitors and managing staff, but they are also making difficult decisions about the ability of their business to grow without incurring an unserviceable level of debt.

Many successful businesses with quality products or services, solid market support and reputable trading methods can suddenly find themselves in a situation where they are being dragged down by a burden of unsustainable debt. If your business is in this situation, it is possible to turn it around with some quick action, hard decisions and good advice.

The first thing to do is to perform an objective assessment of the current financial position of the business. If you have the relevant skills, you could do this yourself, but it may be difficult to be objective, in which case you should speak to a business advisor. Comparing your budget figures with the actual results should highlight areas of concern. If you are trying to run a business without a budget, it is essential that you establish one.

Go through your list of creditors and prioritise those that must be paid now, those that you know will wait a little longer and those that may be willing to discuss a payment plan with you. At the same time, review your debtors and contact those that are outstanding. Give them a reminder and a payment date or negotiate a payment schedule. When these funds arrive, apply them to the creditors’ list that you have already prioritised.

You should have already contacted the major creditors and advised them of your position. Utilise any hardship provisions they may have, request an extension of time to pay or offer to make partial payments and start discussing a payment plan. They want to be paid without having to engage in expensive legal action, and if your business has a reliable payment record in the past, there is every chance they will assist you.

Now contact your bank and advise them of the situation, and the measures you have already taken to rectify it. Offer to provide a profit and loss statement and a cash flow forecast so they understand the issues that have brought your business to this position. You may be able to apply for an overdraft or some other financial measure to get the business back on track.

A business advisor will help you look at every aspect of the business and recommend changes. They may include staff reductions, new suppliers with better trading terms, an upgrade to management and accounting systems to give you quick and accurate financial reports, and a range of other measures.

By acting immediately, you will reduce the reputational damage to the business and return it to a profit-making entity. Close attention from that day forward to your budget, cash flow and market conditions should see you in a position to stay debt-free.

Many of these same business owners are also struggling with the regulatory requirements of managing their SMSFs (self-managed superannuation funds). They have chosen an SMSF as the vehicle for building wealth for their retirement rather than hand control over to a retail superannuation fund. They may not have realised it at the time they made this decision, but an SMSF requires a lot of time for administration and also for managing its investment portfolio.

More and more owners are now deciding to put all their efforts into managing their businesses and engaging companies such as SMSF Assure to look after their SMSF administration. If this is your situation, you may also want to consider this option. It will allow you to concentrate solely on your business and in the process, keep your eye on that goal of being debt-free all year round.

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