How debt crushes a business in Canada.
Debt eliminates a business’ ability to take advantage of opportunities and to weather storms. This economic downturn has forced businesses to borrow directly by going to the banks or to borrow indirectly by slowing supplier payments, getting behind with payroll taxes, and cutting owner pay.
As debt increases, more and more of the daily, weekly and monthly revenues are assigned to service debt. Less and less goes to keeping the business healthy. Then more borrowing takes place and the debt spiral takes a sickening lurch.
When this position is reached, it is possible to park the debt and rebuild the business. Sometimes the solutions are harsh and sometimes lengthy. If it took a few years to get to that unhappy position, then it will not be a five minute fix. But it can be done.
Working harder to dig a deeper hole.
Increasing sales will not always return a business to health. If there is a faulty pricing strategy or costs are not under control, increasing sales means the company’s wheels spin faster and faster digging a deeper rut every day and with every sale. But the red ink does not stop. If a company can attack costs and develop a rational pricing policy, purposefully train the sales staff and ramp up its marketing, then profits can roll in.
When businesses panic:
- Debt has overwhelmed the business. CRA is at the door, WCB not paid, scraping every month end to meet the payroll.
- No money – Month after month with no profit and small paycheques for the owner.
- The business is borrowing to meet day to day expenses.
- The competition passes them by at high speed, stealing good customers as they pass.
To discuss your debt challenges call:
Andrew D. Gregson B.A., M.A. M.Sc.(Econ)
http://www.pricingstrategies.ca
101-1735 Dolphin Ave.
Kelowna, BC, Canada V1Y 8A6
toll free: (888) 959-0752
Andrew@pricingstrategies.ca
