“I’m desperately seeking a way to turn around my business. I’ve run up a lot of debt in trying to promote a new product, but sales are not coming in fast enough to cover my repayments.

“I am confident that I’m about to make a breakthrough as more customers are accepting my product, but I don’t know how I’m going to survive until that happens. I can’t give up now, as generating income from the business is the only way I can hope to get out of my debt. What can I do?”

The above quote tells the real-life scenario of a determined entrepreneur, who despite all her financial challenges continues to follow her business dream. She has a vision to revolutionize her industry with new technology, but like many young business owners, has underestimated what it would take to succeed.

Faced with escalating debt, she is anxious about her future and desperate to find solutions.

Operating a small business in Jamaica can oftentimes be difficult for entrepreneurs. One of the biggest problems is finding affordable financing to meet working capital needs. If you’re fortunate enough to get a loan, it can be even more challenging to generate enough income to meet recurrent expenses plus cover the repayments.

Many businesses have suffered tremendously, sometimes with fatal results, because the owners fail to seek professional help when they are in difficulties. If your establishment is troubled by financial woes, don’t try to rely on your own devices to figure out what to do.

Even if you are talented in your particular field, you may still have to learn the skills needed to successfully operate a venture, such as business plan writing or sales forecasting.

Some institutions that can provide assistance include the Small Business Development Agency, the Corporate Finance Broker Unit of Jamaica Trade and Invest (JTI), the Jamaica Business Development Centre. For very reasonable costs, their experts can help to diagnose your operational ailments and prescribe an action plan that can bring you back on solid footing, or help you to transition out of the business if that’s the best route.

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Let’s now take a look at the steps that our financially challenged entrepreneur, who we’ll call Sharon, had to take in her effort to resuscitate her business:

What is the total debt?

Whether dealing with business or personal liabilities, it’s important to first assess your total debt picture. Sharon knew she had a lot of overdue obligations, but she didn’t have an exact figure. Using a debt tracker spreadsheet she was able to write down the different loan sources, the balances owed to each, the required monthly payments, the interest rates and the time left to repay these debts.

Although seeing all her liabilities together with one large total made Sharon even more worried, it was crucial for her to be clear on how bad it really was. It’s virtually impossible to hit a goal that you can’t see, and having a total on her obligations gave her the targeted amount she needed to get out of debt.

What are the monthly operational costs?

Now that Sharon knew her total debt picture, the next step was to assess the current expenditure needs of the business. Again, she did not a have total figure for all the operational costs that were incurred. A business budget is a vital tool that can help you to project how much money you will need to keep going every month.

Sharon used a business budget spreadsheet to capture employee expenses, rent and utilities, marketing and transportation costs, loan repayments, and other incidentals. When the total expenses figure was calculated, she could see that she would either need to earn that amount every month to survive, or find other working capital support to cover the shortfall.

How can income be increased?

After looking at Sharon’s budget it was clear that her monthly cash flow was inadequate to meet the recurrent costs. The problem was that her business was solely dependent on procuring large orders, which could take months to confirm and conclude. While these jobs would eventually provide significant earnings, Sharon had no regular income and her monthly obligations were overdue and incurring additional interest.

We looked at her industry and recognized that there were other lower cost items that she could supply to a larger retail market. It was also noted that there was a large, under-served market in need of the new technology that her business could offer. Using the total expense figure from the budget we could project how many of the smaller items she would need to sell every month in order to stay afloat. She would continue to pursue the larger, high-end contracts as these profits could be used to speed up her debt reduction efforts.

Armed with her new plan of action, Sharon is very optimistic that within a few years, she will be out of business debt and be happily operating a very successful enterprise.