How to Reduce Business Debt Leverage
“Leverage amplifies risk. So ideally, that risk should be paired with nearly guaranteed future profits.”
The more leveraged your business is, or the more debt that it has compared to top line annual revenue (or expected annual revenue), then the more cash flow fluctuations can disrupt cash flow drastically, and strain an already leveraged business.
This makes for a highly volatile and eroding liquidity (cash) crisis for a business.
The business has no cash. Cash is starting to come in slower than it is flowing out.
If you are not in “growth mode” or growing sales 25%-30% year-over-year then your debt leverage, or total debt to annual sales should be well below that 30% mark.
In other words, if you are expecting to grow your business 30%+ this year and are on course to accomplish that, then leveraging up to 30% debt to expected annual revenue works out and, yes, in some instances can help you get there quicker.
The trick is to have the plan to DE-LEVERAGE your business.
The same goes for your business if you experienced drastic dips in sales or expected sales.
There are strategies and solutions to help restructure your business’ balance sheet back to health (liquidity).
To refinance, or restructure or reorganize your business when your period of growth ends.
We can help you with our Balance Sheet Restructuring advice and strategies.
Setup a FREE consultation call with us today if you would like to learn more
about Refinancing and Restructuring.
BUSINESS DEBT & CASH FLOW SOLUTIONS
Bernarsky Partners LLC is a business financial services advisory firm comprised of finance professionals with extensive industry experience offering Business Debt Solutions.
Some of our Business Debt Solutions include:
2. RESTRUCTURING BUSINESS DEBT
4. BUSINESS CASH FLOW ANALYSIS
Setup a free consultation call with us to review your business debt and cash flow situation, business goals and to discuss Business Debt refinancing and restructuring options.