
4 Smart Ways to Manage Growth
Why Paying Off Debt To Quickly Can Hurt Your Growth
We often hear that debt is bad and should be paid off as soon as possible. But did you know that paying off business debt too quickly can slow down your business growth?
Let’s take a closer look at why finding the right balance between debt management and business growth is crucial for long-term success.
1️⃣ Cash is King
When you use all your money to pay off debt quickly, you have less money to spend on growing your business. You need cash for things like hiring new employees, marketing, or buying better equipment. These things can help your business grow more than paying off debt fast.
By keeping cash on hand, you allow your business to take advantage of opportunities. For example, one of my clients was able to obtain a long-term working capital loan which he used to payoff his bank line of credit, credit cards, bring his payable current, and give him some additional (and sorely needed) additional working capital to fuel growth. He was finally able to get off the debt hamster wheel.
By recalibrating his balance sheet, he was able to free up cash flow. He now pays off his credit cards every month, has a 6 month cash cushion, and even closed his bank line of credit. No more payroll panic.
2️⃣ Debt Can Help
Some debt is okay if you use it smartly. It can help you take advantage of opportunities and grow your business faster. When managed well, debt is a tool to help your business succeed, not just a problem to get rid of. For instance, you might take on debt to open a new location, purchase new equipment, or expand your team. If those investments lead to more revenue, the debt will have worked in your favor.
A real-world example: I'm currently helping a client with a leveraged buy-out of a silent partner. He will now control this venture 100% and keep 100% of the profits!
3️⃣ Good Cash Flow is Better than No Debt
A healthy business isn’t just about having no debt—it’s about having a steady flow of money coming in. When your cash flow is strong, you can handle debt while continuing to invest in growing your business.
Imagine a scenario where a business rushes to pay off its debt, but then struggles to cover basic operating costs or invest in growth. This can create more problems in the long run than simply having a manageable level of debt. Focus on keeping your cash flow strong so you can handle debt while still investing in your business.
Case Study: I recently helped one of my clients apply for a grant to purchase equipment for his manufacturing business. He could have gone to a bank but he smartly identified a state-sponsored program and is using the OPM method ("Other People's Money") to leverage technological advancements in modern machinery to improve his revenue and profits!
4️⃣ Interest Rates Matter
One of the key factors in debt management is the interest rate. If your business debt carries a low interest rate, paying it off quickly may not be the best financial decision. Instead, you can use the extra cash to invest in activities that bring a higher return, like expanding your product line or improving customer service.
I helped many business owners obtain SBA EIDL loans. These long-term, low rate loans were a game changer, helping them climb out of the financial wreckage of the COVID19 Pandemic. Unfortunately we are experiencing a high-interest rate environment, so don’t hesitate to ask creditors for lower rates or better terms—they’re often more flexible than you think.
In Summary
While being debt-free may sound like the ultimate goal, it’s important to recognize that business debt, when managed wisely, can actually help your company grow. The key is finding the right balance—keeping enough cash on hand for growth while paying off debt at a sustainable pace.
Looking for more guidance on how to manage debt and cash flow in your business? Let’s chat! Feel free to reply to this email or schedule a free consultation here [My Calendar Link].
Wishing you a profitable week ahead,
Patrick
About Me:
👋 Hi, I’m Patrick. If you’re ready to conquer your financial fears and turn your business into the stable, thriving machine it’s meant to be, I’m here to help. Together, we’ll:
Gain complete clarity over your numbers (no more late-night Google searches)
Manage your cash flow and debt confidently
Make sure you pay yourself first (finally!)
Build a strategy that keeps your business financially stable for the long haul
Let’s work together and put your financial fears to rest.
As a veteran in financial coaching with over 30 years of corporate banking experience, my mission is to empower small business owners like you to become numbers confident, optimize cash flow, leverage debt, and pay yourself competitively.
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Here’s how I can help you:
1. Profit Accelerator Program: Master your business numbers in just 30 days, uncovering hidden profits of $25K-$75K+ over the next 3-12 months.
2. Loan Consulting: Need the best rates and terms on your next loan? With 30+ years of banking experience, I’ll make sure you get a deal that works for you.
3. Profit Accelerator Digital Course: Become confident with your numbers, boost cash flow, and learn to pay yourself first in just two hours. This course is designed for busy professionals who want immediate results. ($197)
Ready to take your financial strategy to the next level? Let’s connect and make sure you’re running a thriving business while paying yourself what you’re worth.