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How to Tackle Your Debt Burden and More of Your Questions Answered

Like when you should take a mentor’s advice with a grain of salt and dealing with staff who want higher salaries when you can’t afford to pay more.

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How to Tackle Your Debt Burden and More of Your Questions Answered
PHOTO: ISTOCKPHOTO

What can I do to lower my debt burden? It’s now taking thousands of dollars off bottom line profitability in interest payments.

After so many years of very low interest rates, the sudden jump has caused pain across the economy. While Wall Street is expecting cuts later this year, we seem to be in for a changed economic environment. It would be prudent to be proactive in managing your debt, says business consultant David Brown of the Edge Retail Academy. He recommends the following steps:

1. Start by looking at the refinancing options. Shop around and assess whether there are loans with more attractive rates that still meet your needs.

2. Pay down debt. If you have surplus cash available, then it could be a good time to reduce your debt by making additional payments. “Aside from lump sums, a small increase in your regular payment can have a huge impact over the long term in reducing your total liabilities and payments for the life of the loan,” notes Brown.

3. Look at your fixed vs. floating options. “If your current debt is fixed at a lower rate than current market, then it’s good news. But if it’s going to end soon, you’ll need to decide whether to revisit that fixed status earlier or wait for it to finish. “This will depend on whether you feel rates may rise further or if the top has been reached and rates will either hold or come back down,” he says.

4. Negotiate with your existing lenders. In some cases, they may be willing to reconsider terms, especially if you have a history of timely payments and a strong credit profile. Even if rates are higher, an extension of the loan length can lead to lower regular payments, taking pressure off cash flow.

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I have an older mentor I always turn to for advice on business and am currently facing a big strategic decision but don’t agree with his suggestion. Should I bow to his superior business experience?

On major decisions, whether in business or life, the purpose of seeking advice is not to get answers. It’s to gain perspective. No one has all the answers or knows what’s best for you. They can only share what makes sense to them (and in business, yes, experience counts for a lot). But the most important question to ask is not what you should do. It’s what you might be missing. Gather all the information and input you can, run the scenarios, do a pre-mortem, and then make a decision on what you feel is best. If your processes are sound, your decision will reflect what you knew at the time. No matter what happens, you made the best call you could.

I’d like to be a good boss but several of my staff are angling to be paid more, which I can’t do right now. Isn’t giving them a job in this uncertain environment enough?

Simply paying someone a salary doesn’t by definition make you a good boss. Of course, the issue isn’t just money, it’s what they’re trading for it: their time and their life, so money in your employees’ minds is tied up with the issue of “what’s fair.” If they feel they are working hard and not sharing in the benefits, they aren’t going to work particularly hard for you much longer. (One answer is to share some financial data so your staff can see you are struggling too if that is the case). People also want to be proud of the organization they work for and recognized for their place in it. They want some control over what they do, too, so don’t micromanage, and finally, they want camaraderie, the sense of belonging to a team. Meet all these goals and you probably won’t have to worry about employees making excessive demands for pay.

As the boss, at what point should I bow out of the sales process?

Working out the value of your time to the business is a fairly straightforward sum and if your financial goals are bigger than any sales you could close in the dispensary, then you are right to be looking to spend more time strategizing, working on marketing campaigns, meeting with potential partners, taking advanced business courses or whatever. But it’s a mistake to think you can or should ever STOP selling. Your staff needs to see you constantly looking to bring in new business. That can be with regular stints on the sales floor, playing a support role, making the odd old-fashioned sales call or by trying to sell the company at a higher level. Once it stops with you, it’s over (from the top to the bottom).

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