Bringing a business to life is an exhilarating and potentially tumultuous journey. Despite the ability to revolutionize the industry and turn impressive profits, your company’s financial health may be susceptible to extreme fluctuations between the heavily-involved investment decisions and unavoidable startup expenses. In some cases, business owners have no choice but to turn to bankruptcy.
While declaring bankruptcy doesn’t spell the end of your business career, recovering from obliterated credit and a damaged reputation can be challenging. As an entrepreneur, you must balance your creative ambition with financial interests. Don’t allow debt to throw you off your game and make an effective plan if bankruptcy rears its ugly head. If necessary, one of the most crucial steps you should take is consulting an experienced bankruptcy attorney from a firm like wh Law.
The best way to deal with bankruptcy is to avoid it altogether. There are several ways a small business can protect itself from financial complications, most of which you can easily integrate into everyday decisions. By implementing these five strategies, you will insulate your business with financial fortitude.
Sell unessential assets
Every year, take stock of items or assets you haven’t used. For instance, you can leverage unoccupied storage units, stationary company cars, and even old fax machines for extra cash and space. Larger businesses may consider hiring a broker who can help you acquire the maximum return on items up for sale. Ridding yourself of outdated or untouched assets allows you to stay current on new technology while adding value to your business.
Prioritize repayments
Stay vigilant with bill payments and prioritize high-interest loans above all else. When neglected, a high-stakes repayment may usher in your company’s last legs. Remember, secured loans, building rent, payroll taxes, and utility bills should rank first on your list of payments. In comparison, bump the less high-priority expenses, including marketing costs, repairs or maintenance fees, and payments to unsecured creditors, to the backburner.
Renegotiate contracts
Maintaining an open dialogue with creditors allows you to renegotiate more forgivable repayment terms. Being honest with a lender about potential bankruptcy may permit you to establish a more feasible payment plan. Although it may be time-consuming, inquiring about formal contracts may secure your business’ well-being.
Reduce excessive expenses
In the same way that we pay for unused subscriptions or memberships in our personal lives, we make equally gratuitous payments in the business world. Almost every business is doling out cash to places that do not add to their overall value. Take some time to attentively comb through monthly finances and strike out unnecessary expenses like lavish conferences or extraneous personnel.
Face the music
Once you’ve spotted a red flag in your business’ finances, don’t hesitate to take action. While your initial reaction may be to push problems to the side, an out-of-sight-out-of-mind strategy never succeeds.
Overdue bills or dwindling funds can evolve into much bigger dilemmas in a short period. That said, speak candidly with your team and develop a course of action, whether that’s adjusting profit projections or reducing cash flow. When things take a notably wrong turn, consult with a debt expert who can help you develop the most effective approach.
Final thoughts
Although declaring bankruptcy isn’t the end of the world, it’s best to protect your business against financial ruin whenever possible. By cutting unnecessary expenses and selling nonessential items, you can save a considerable amount of cash. Prioritizing payments and renegotiating, whenever possible, will also help you regain control of your debt. Remember, when the going gets tough, roll up your sleeves, and fight for your business’ future.