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Are you a small business owner in Las Vegas? Then you know just how difficult this business environment can be. Independent businesses come and go seemingly every day, victims of an unforgiving economy and fickle consumers.
At least, that's what many business owners want to think. They want to blame outside forces for their struggles. Customers who don't know what they want, an unstable marketplace, a tanking economy: all these things are common culprits when business owners in Las Vegas play the blame game.
It's true that a business's success or failure is often due in part factors outside of a business owner's control. However, it's also true that, when a business struggles, it is often, at least partly, because the business owner made poor decisions along the way.
The reasons why a business struggles, though, are less important than what the struggle leads to. For many business owners, struggle leads to debt. That debt, when poorly managed, can be a huge burden for any business.
Why do business owners go into debt?
We tend to think of debt as a consistently negative thing, but for business owners, it doesn't have to be.
Debt can be a smart decision for businesses with intelligent plans to grow. Smart business owners recognize when it's time to expand, remodel, or add new services. They also understand the need to stay up to date with the demands of the marketplace. While they understand that all of these things are necessary, they may not have ample personal capital to do them.
In these cases, taking on more debt makes sense. Business owners can seek customized loans and lines of credit that can help them reinvest in their businesses; and, if they're already relatively successful and established, they should be able to find and negotiate favorable rates and deals.
Unfortunately, success isn't the only reason that business owners go into debt, or even the most common. Emergencies and sudden shortages in cash flow can force business owners to dig into their lines of credit to pay their employees and keep the lights on. The more often this happens, the worse the situation gets.
However, even one emergency, when poorly managed, can snowball into a debt nightmare for business owners in Las Vegas.
In these situations, it's not viable to pay off the debt. The payments are too great; the interest is too high; or the situation just isn't sustainable. In these cases, business owners need to evaluate their options for paying off business debt in a timely and cost-efficient manner.
How can small businesses in Las Vegas pay off their debt?
Thankfully, no matter how bad it gets, there is a way out. Las Vegas businesses have options when it comes to getting out from under a mountain of debt.
The debt snowball
The "debt snowball" is a common approach to paying off debt for both businesses and individuals. It assumes that you have multiple sources of debt, not just one big one.
With the debt snowball, you determine which of your debts has the smallest balance, and you focus your efforts on paying that off. You don't stop paying the minimum payments on your other debts, of course. You just take any extra money you have each month and put it toward the debt you're focusing on.
This method is a "snowball" because it has a snowball effect, motivating you to keep up the progress of becoming free of debt. Once you pay off your first debt, even if it was your least significant debt, you become more motivated to pay off the rest. Paying off debt is difficult, after all, and these small victories can be huge for keeping a person on track.
The debt avalanche
The "debt avalanche" focuses on paying down the debt with the highest interest rate first, regardless of how much the balance is. The goal is to eliminate the debt that will cost you the most money in the end.
The avalanche can be an extremely effective technique for people who have the discipline and financial flexibility to think long-term. The gratification of paying off your debts has to wait, though, and it can be easy to fall off the wagon if you're not dedicated to keeping up.
Both the snowball and the avalanche assume that your business is stable and profitable enough that you'll be able to find and allocate extra funds towards getting yourself out of debt.
Perhaps profit is there already. Often, though, it isn't. Businesses have to find it by cutting costs. Sometimes, this can mean cutting payroll, selling off unneeded equipment, altering your products or services, or renegotiating your relationships with vendors.
If you've tried all that and still aren't making good progress towards paying off your debts, it might be time to consider a different path, namely, debt consolidation.
How can debt consolidation help business owners pay off their debts?
Debt consolidation means that a business owner takes all of his or her debts and consolidates them into a single package with a single interest rate and a single monthly payment.
If you're dealing with multiple sources of debt as a business owner, then you can see how this could be helpful. Instead of dealing with several different creditors hounding you to pay off your debts, you only have to deal with a single payment every month. That payment may save you money in both the short-term and long-term, too, by reducing your overall monthly minimum payment and by reducing your overall interest payment as well.
It's important to note that there's a big difference between business debt consolidation and refinancing your business debts.
With business debt consolidation, you're combining all your debts into a single payment. This is achievable through one sizeable loan used to pay off all your debts at once.
Refinancing is similar, but focused on a single loan. Business owners take out a lower interest loan and use it to pay off a current loan, saving money in the end.
It seems like a small difference, but it's not. That's because business owners with several different loans or sources of debt probably won't qualify to refinance individual loans.
When is business debt consolidation the right answer?
Simply put, debt consolidation for businesses is an option worth considering when that business can't handle paying off its debts. Even those with the best intentions can fall behind, due to any one of a number of reasons.
That's when the calls start to come in. Threatening calls from creditors are among the most unpleasant things people have to deal, especially those trying to run a business. Those behind on their debts often become afraid to pick up the phone, unsure if it's a new customer or an old creditor with a bone to pick. A business that doesn't answer its phone is soon one that shuts its doors, obviously.
In a case like this, debt consolidation may be the best option to get your business back on track and stop those calls for good.
Things don't have to be this bad, though, for debt consolidation to be a good decision. When debt consolidation can bring down the total monthly payment you're paying each month just to keep up, it's a good financial move. The same is true when it can also lower your total interest so that you pay less in the end.
When is business debt consolidation a bad idea?
There is a downside to everything, of course. Business debt consolidation seems great on paper. One payment, possibly for less money at a lower interest rate, seems like a good deal for a business deep in debt.
That said, business debt consolidation isn't a cure-all, and there are definitely situations where it's not the right idea. Here are some situations where business debt consolidation doesn't make sense.
When the extended payments equal more money
When debt consolidation works well for your business, it saves you a lot of money in several different ways. However, arguably the most important way that it saves you money is by reducing the overall amount that you're paying over time by bringing down your interest rates.
Unfortunately, not every debt consolidation package is sure to bring down your interest rates and your overall interest payments over time. Some debt consolidation companies try to hide this by extending the repayment period they're offering you. While this deal may seem tempting because of the lower monthly payments and the single creditor, it won't actually save you money in the end.
When you use debt consolidation to avoid your real problems
Debt consolidation can be a life-changing process that helps businesses in Las Vegas and beyond get back on track, get their finances in order, pay off their debts, and become profitable again.
However, debt consolidation can also be a way that businesses treat the symptoms and not the underlying causes of their real problems. They see debt consolidation as a way to deal with outstanding debt in the short term, which it is, but they don't properly identify the pattern of spending and behavior that got them into debt in the first place.
In these cases, debt consolidation can actually be a dangerous thing. Business owners use debt consolidation to avoid facing difficult truths about the way they do business, buying themselves time by consolidating their debts and making them more manageable. They immediately go back to their old ways, overspending and poorly managing their businesses until forced to take on even more debt to bail themselves out. In these situations, they may even seek debt consolidation multiple times just to keep the cycle going.
In short, if you aren't willing to face up to the reasons that you got into so much debt in the first place, then debt consolidation is only going to enable you to get yourself into a worse financial situation that you were in initially.
How can businesses get debt consolidation in Las Vegas?
First, understand that not all debt consolidation options are equal.
When you're sourcing a vendor for your debt consolidation loan, for instance, you're going to get many different options with different monthly payments, payment periods, and interest rates. Ideally, you'll want to choose an option with manageable monthly payments and the lowest interest rates possible, but what's actually viable is going to depend on your business. What can you afford? What can you keep up with? What kind of sacrifices are you willing to make? These questions are vital for figuring out what exactly you want to do.
You should also be aware of different loan types. Secured loans and unsecured loans are especially important to understand. A secured loan is tied to specific pieces of collateral, such as your business, your house, or some other asset that you own. Unsecured loans, meanwhile, are offered to you on credit alone. While secured loans often have lower interest rates, they carry higher risk. After all, if it leads to you losing your home or business, why seek debt consolidation in the first place?
Finally, find a debt consolidation company that you can trust. Unfortunately, many debt consolidation companies in Las Vegas and throughout the country exist that are a little less than honest. They prey on vulnerable indebted business owners, making promises they can't keep and charging huge upfront fees for their services. Then, they take your money and disappear without doing much of anything to help with your debt.
Our advice: Do your research. At the very least, search the Internet for a company to see if it comes up in any news articles. Check out its Better Business Bureau profile. If possible, try to find objective, legitimate reviews from past customers who can vouch for the company's success.
If you're interested in learning more about National Debt Relief, we invite you to check out our reviews and contact us today. We'd be happy to help you work through your debt consolidation needs.