How to pay off a big debt and not go crazy: 5 rules for entrepreneurs

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

How to reduce spending and develop a payout mechanism and why it is always better to start a business alone.

We started our first business almost seven years ago. Before that, I drifted, working for hire in a variety of roles: from a ballroom dance teacher to an SEO optimizer. The latter became my business, and without long preludes: there were people, they cheated, played enough and removed themselves from management. The director and I became equal partners, with the traditional 50-50.

The business was developing, they even rented an office closer to the center. The sales department was assembled and dispersed three times. The work switched to the morning meeting and joint coffee with a discussion of plans. The process took at most 2-3 hours a day. Not a business, but a holiday.

The problems began when I decided to launch the second direction - video production. The partner did not like the idea: I devoted less time to the joint company and, in general, began to take independent steps.

We fought for a long time, and in the end he decided to leave. He demanded compensation - almost two million rubles. Issued with a receipt, allegedly he lent them to me.

Six months later, the ex-partner filed a lawsuit against me. The process lasted two years, and now we owe each other seven figures.

I remember very well the moment when the amount became real - I could not pay for lunch in a cafe with a single card. I checked my internet bank. I saw the balance on the screen - minus two million.

Immediately a wave of fear and panic swept through. Such a real animal fear. You can't give in to him.

But what really needs to be done, I had to figure it out myself.

Rule 1: don't be afraid

Fear prompts you to take rash steps, especially if creditors are pressing. In my case, there was even extortion and attempts at blackmail.

Try to call your closest person and make an appointment. In my case, it was my father. It is strictly forbidden to be alone. You can make irreparable mistakes.

Tell it as it is, without embellishment. You should discuss further actions together: letters, calls and any steps you need to think over with all possible risks.

You will see, it will instantly become easier.

Rule 2: analyze the situation

A very important process that needs to be carried out is determining the depth of the problem. The algorithm is as follows:

1. We postpone all urgent and important matters.
2. We warn relatives about temporary unavailability.
3. We turn off the GSM connection and all notifications on the phone.
4. We turn on the background music in a relax-format.
5. We methodically write out absolutely all debts.

An important point - the "Google Sheets" format is ideal, since you need to have a separate plate that will always be at hand.

Most likely, it will be emotionally difficult. You will try to get rid of part of your debts under the sauce “well, this is for mom, this is for dad, you don't have to write…”. No. We write everything, this is important.

Rule 3: go through the phases of accepting the inevitable

In phase denialsyou will use all means of escapism - aimless hanging on the Net, games, serials. You can't do that. We pull ourselves out of this state. We need to feel the point at which we are, otherwise this destructive phase will permanently cover.

Angerwill. Do not extinguish it, this is a discharge. Of course, to reasonable limits - do not overdo it and go to physical manifestations of aggression.

Bargainingdangerous. It is at this phase that you will replace the real picture with an illusory one: yes, it seems that there are not such big debts, everything seems to be given, everything is normal. No. Not normal. Throwing yourself out of your comfort zone.

Only then will it come to us humility: I know where I am, I soberly understand how to act, I progressively go towards a positive balance.

Rule 4: don't pay too much

Since, most likely, your receipts are irregular, you first need to get rid of as many regular payments as possible so that the amount of debt does not wind up.

Penalties, fines, fixed payments, subscription fees for using services - everything needs to be filtered through a fine strainer.

If the task is to keep the business, use the Pareto principle:

• only 20% of your clients bring you 80% of the profit;
• only 20% of your clients download 80% of your work day.

Important: Profit is the amount of real money that you put directly into your pocket.

For two years I could not understand that I had confused profit and revenue. When the bug was found, six out of eight clients were placed in the reliable hands of partners. As a result, the working day was unloaded almost completely, and the loss of money did not exceed 25%.

If you still have employees, try to negotiate a piece rate or hourly rate. Such a scheme will be more beneficial to both parties, and the main advantage is likely to be a dramatic improvement in labor productivity.

Rule 5: develop payout mechanics

Next, you need to estimate the minimum possible income, subtract the amount for life support from them, and take the remaining amount of funds as a resource for eliminating debts.

This very resource must be proportionally divided into each segment of debt obligations. For this purpose, I created a separate sign in Google, where there is the total amount owed and specific recipients.

Works according to the formula:

Specific payment amount = receipt amount × liquidation resource ratio × ((specific segment amount / (total debt / 100)) × 0.01).

Difficult, let's be specific.

• The total amount of debt - for example, 1 million rubles.
• The liquidation resource coefficient is 0, 2 (this means that 20% of personal income is spent on debt liquidation).
• The amount of a specific segment is 250,000 (for example, a debt to a supplier).
• The amount received is 30,000 (for example, someone gave it, miracles do happen).

You need to understand how much to pay the contractor:

30 000 × 0, 2 × ((250 000 / (1 000 000 / 100)) × 0, 01) = 1 500.

The table should calculate the amount automatically. We drive in the amount of receipt into the appropriate cell - and we pay what happened.

Conclusion

Finally, I want to give some advice on how to avoid such a situation, or at least minimize the consequences. Each item below is backed up by my mistakes, frayed nerves and wasted money.

1. Do not skimp on lawyers

In my practice, three specialists refused to handle the case. With different wording, but the reason, most likely, was the lack of a winning prospect - why spoil your rating.

A competent lawyer will not give any guarantees. On the contrary, in the consultation phase, he will prepare you for the worst-case scenario. But if he gets down to business, then you should feel the reinforced concrete power in every word and gesture.

I'm not romanticizing, it's really important. Any trial, especially for the first time, is a terrible stress, and your main weapon should be Jedi calm and confidence in your righteousness.

2. Don't hope for bankruptcy

There is an illusion that the relatively recent regulatory framework for bankruptcy of individuals allows you to legally jump out of payments of debts, loans, fines and penalties. Is it worth explaining that this is not so?

Most likely, you will not be able to officially work, and all your property, with rare exceptions, will go to the so-called bankruptcy estate to pay off debts. In addition, bankruptcy is not a cheap procedure at all, and the result is often unpredictable.

Avoid this, as a last resort, select a specialist very carefully.

3. Do the business yourself

Partnerships should always be mutually beneficial. Moreover, often the first business is created in a partnership for only one reason - because of the principle of shared responsibility.

There are two possible outcomes:

• the partner-leader will crush the authority of the other;
• the tandem will disintegrate and proceedings will follow.

There can be only one managing partner. The rest should only in strictly specified periods be interested in whether the company reaches the break-even point, if everything is according to plan, when the profit and if help is needed.

And the most important thing. It's just money, don't be silly. And may common sense keep you.