Entrepreneur shares tips on getting out of the debt trap

Windhoek entrepreneur Twapewa Kadhikwa, who has been in the poultry, hospitality and small and medium enterprise (SME) development business for decades, says being in debt is like having a heavy chain tied around your neck, slowly choking you.

She says falling into the debt trap does not mean you are a failure.

“In business, things go wrong. We face a lot of challenges – some of them beyond our control,” she says.

“Society judges you as irresponsible and not trustworthy if you fall into debt, and this can badly affect you and your business. I have a number of tips that could help people get out of debt,” she says.

The most important one is acceptance, she says.

“It is hard, but accept as soon as possible that you are in debt, so you can start addressing it.”

Kadhikwa says when you are in debt, it’s common to blame yourself or others.

“If you do not forgive yourself and others, it drains your energy, which you need to focus on reviving your business. You need to bounce back emotionally and mentally first before you can bounce back financially,” she says.

Kadhikwa says to get different results, one must do things differently.

You may adjust your lifestyle, change your priorities, change the way you manage your business finances, and redefine your financial personality, she says.

She warns against get-rich-quick schemes promising quick and high returns.

“Make a list of the people you owe money and set up appointments with each of them. With humility, apologise for the inconvenience you have caused them and share your plans with them and agree on a time frame for repayment.

“Honour those plans and if you get stuck, communicate again.

“Become financially literate and understand how this affects the different areas of your businesses.

Acquaint yourself with terms like cash flow, turnover, profit and loss statements, management accounts, interest rates, banking products and loan terms.

“If you are going to get out of debt and pursue financial freedom, you cannot rely on the knowledge you had when you got into debt in the first place,” she says.

Kadhikwa says you should focus on rebuilding your business based on your strengths.

“It is not opportunity that makes you money, it is capability. This is the time to take stock, do a complete a swot analysis of your affairs, and identify your competencies.

Rebuild your business based on facts, competencies, experience and leveraging on your network,” she says.

Kadhikwa says many entrepreneurs commit all their income to servicing debt out of desperation, but this is dangerous.

“I advise that a third of your income goes into the business, a third should be used to repay debts, and a third for your personal expenses,” she says.