Reader Questions

Should I Sell My Business to Pay Off My Debt?

Written by Consumer

Situation *
I took 5 story shop lost building rent back to others and myself took over 1st fl for restruantant and 5th fl for guest house total sale 21000rm monthly after expenses and staff salary profit 4000rm my mottage /loan to pay monthly 3000

I got debt to pay 70000rm so my idea is to sell my restruantant business and pay off debt so balance will be guest house and renting business to other 3 floor. after sell business for that floor rental i can get back 5000rm monthly so thus 3000rm i can use for morttage and i can get incame from guest house and balance 2000rm . So should i sell my business

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Consumer

This is information that was submitted by a third party and not generated by GetOutOfDebt.org or Steve Rhode.

2 Comments

  • There are many reasons for selling a business but if you are looking just at the financial part, you only have to ask two questions:
    1. Am I making as much money as I should be making?
    2. Could I use my cash and time in a way that makes more money?

    I can’t tell from your question if your debt is business debt or personal debt and you don’t want to confuse them. If you are generating a healthy profit from your business after expenses and debt service then you have a good business. Can you generate more profit by selling those parts of your business and paying off the debt? If you have a high interest rate and/or crushing monthly payments that reduce your profits then you might want to sell, especially if you are eliminating the low margin parts of your business while keeping the high margin parts. But if you are just trying to raise cash because you don’t like debt, you may be making a bad long term decision.

    In a similar situation I once asked for free advice from SCORE (www.score.org), a group of retired executives who volunteer their time. A face to face meeting will probably be more valuable than advice from someone who doesn’t have all the details.

    Good Luck!

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