Business Debt Reduction

Key to Rebuild Profits and Surviving Downturn

Thousands of business entities are on the brink of financial disaster and recognize-it's no longer business as usual. Most don't realize that they can take measures, such as reducing debt to help save their businesses.

Enacting a plan to reduce business debt can save a business. Businesses that borrow unknowingly take on a demanding and parasitical partnership with creditors that often will dictate how a company operates and one that will siphon profits through interest payments. Using revolving credit for capital adds additional risks to operating your business and may not be the only alternative for starting or funding expansion. Any debt can be too much, if a business doesn't generate multiple times the principal and interest payments in added net profits attributable to the use of borrowed funds. So how much debt is reasonable for your business? The list below illustrates some acceptable levels of debt-to-capital for selected industries.

• Industry Debt%
• Publishing 34%
• Home-building 37%
• Advertising & Marketing 37%
• Lodging & Gaming 56%
• General Retailing 24%
• Supermarkets Drugstores 33%
• Commercial Transportation 18%
• Packaged Foods 27%
• Restaurants 23%
• Health Care: Managed Care 20%
• Movies & Home Entertainment 17%
• Source: Standard & Poors

Credit and debt problems are evident. Solutions may seem less so. Most small businesses lack a basic understanding of alternatives and solutions including (business debt settlement) that can provide options to bankruptcy. Owners faced with excessive debt, tend to make cuts in operations just to maintain credit and seldom seek other alternatives to business closure or bankruptcy. These can include exercising alternatives such as Self-liquidations, Turnaround Specialists and even Assignment for the Benefit of Creditors (ABC's). A little know option called Business Debt Settlement can be highly effective as a debt reduction tool and can take a huge burden off the business owner, preserve cash flow and allow them to focus on running the business.

Business owners that find themselves in too much financial difficulty can and should begin to seek remedies to reduce non-fixed expenses such as bank debt, vendor and supplier debt and other related business debts to balance and restore profitability. If this is a challenge facing your business today, try to remember that whatever decision or course of action is taken, there is a price associated for everything including maintaining the status quo. Tough times, require tough action. Look for out-of-the box alternatives, which in today's economy can be the key to changing the situation for the better.

Christine Janklow is a leading business debt expert as seen on About.com; AllExperts.com and other business to business forums. She possesses 25 years of experience in business debt management and is President of SettleSource, Inc. A Los Angeles based business debt reduction firm.