March 7, 2025
Is debt affecting your business’s sales?
Debt can be a helpful tool, and most businesses have some. However, debt can easily spiral out of control. When this happens, every area of your business, including sales, can be affected.
Businesses grow by spending money on things like marketing and promotions or expanding operations. But if your business already has a lot of debt, you’ll have to focus on repaying these loans as a priority.
Without the finances to invest in marketing, promotions, and other business needs, you can bet sales will suffer.
So, what exactly can you do if your business already has debts that are affecting your sales? In this article, we’ll share some helpful tips! Let’s get started!
Businesses fall into debt for different reasons. Sometimes, you need a loan to buy really expensive equipment. At other times, you may need a loan to cover cashflow challenges due to things like unpaid invoices.
There is no one-size-fits-all financial solution, so it would be helpful to identify the precise issues upfront.
You need to figure out, for sure, where your money goes. This is called a cash flow analysis. It’s best to hire a CPA for a thorough and reliable cash flow analysis.
However, to do a simple cash flow analysis, track all cash inflows and outflows in a given period. Analyse them to identify any trends and areas of weakness.
Do you have a clear picture of your business’s debts, interest rates, and due dates? This is an easy way to see what may be driving your debt challenges.
Debt can take different forms, and it’s not necessarily bad for your business to have some of it. But if you have too much in high-interest loans, that might be a problem, as this class of loans is usually long-term and not advisable for small businesses.
Unfortunately, too many businesses are already in the long-term debt trap. According to one Creditsafe report, 58% of businesses said their long-term debt had increased in the past year.
These loans are risky. If you take too long to repay them for any reason, they typically increase in cost. This leads many businesses into the trap of borrowing more to cover old debt.
If you already have high-interest loans, you should aim to pay these off as a priority. Some businesses benefit from working with a debt relief program, which can negotiate better terms and help reduce the overall debt burden.
Debt itself isn’t something customers are likely to notice right away. But if cutting costs leads you to cut corners, they’re certain to notice.
Has your business’s debt already had this effect on your customers? If there’s been an increase in complaints about service quality, product changes, or pricing, the answer is likely to be yes.
Most small businesses can learn how to manage cash flow and debt effectively. The key is to recognise the problems early enough and apply the following tips to help fix them:
Traditional bank loans can be costly. You may find much more convenient pricing with alternative funding sources such as:
Boosting revenue doesn’t always require a big budget. Search engine optimisation (SEO) is a cost-effective way to attract more customers online.
Consider working with a reputable link-building agency to improve your website’s search rankings, drive more traffic, and maintain healthy sales.
Not all products or services contribute equally to profitability. If you’re finding that you have fewer resources to devote to marketing and sales, then focus your efforts on high-margin products and services to maximise revenue with less effort.
You might struggle with cash flow simply because your pricing is inappropriate for your product or service. It might be time for a pricing review!
Start by increasing prices on premium products or services. As you increase prices, be sure to also make visible improvements to your offerings to justify these changes.
Managing business debt is a challenge for many businesses. If yours is already struggling with debt, the road to recovery won’t be easy, but it's doable. You can get started by applying the tips we’ve shared in this article.
Don’t forget to see professional help, too. And if you’re not yet in debt, It’s best to avoid getting into business debts by fixing your cash flow early on.
