Here are the Top Tips to Avoid Bankruptcy for your Small Business.
One in every five US households files for bankruptcy every year. So, one or more catastrophic events in their lives that leave them no other option but bankruptcy affect nearly 1.5 million people. The numbers are shocking, but the number of bankruptcies in America does not mean you’ll go bankrupt with your small business, even when you fall upon hard times.
Bankruptcy is not always the only option that will address your challenges. Bankruptcy is time-consuming, and it also adversely affects your credit. As you review your financial situation and the viable options, you need to know about bankruptcy.
Consider the types of bankruptcy that might work for your small business, but also consider whether there are other (better) ways to help you get through this difficult time. Here are a few tips to help you avoid bankruptcy, even when times are tough.
Pay Off Your Debts
Make sure you pay your debts. If you have to choose between your debts, prioritize your essential bills first. Usually, pay high-interest-loan bills off first. The faster you pay down those debts, the more you’ll save. But, of course, it’s also best to stay on top of the whole situation without letting those bills slide.
Negotiate Payment Options
One of the first steps in regaining cash solvency is looking at your business expenses. For example, if you have bills due every month, reach out to your creditor, let them know the situation, and request payment options that allow you to pay your bills on time.
Eliminate Non-Essential Expenses
Take a careful look at your budget and highlight any essential expenses. Any expenses you didn’t highlight might be on your chopping block. For example, you may sell off company vehicles and use public transit, or you discontinue special perks and benefits like the weekly employee lunch, gym memberships, and other extra costs.
Sell Off Non-Essential Assets
Do an inventory of your business and property to determine whether you have assets you’re not using or if they’re not essential to your business processes. For example, you might have a printer and copy machine in every office of your building, but you could get by with just one.
Or, you may sell off a building, rent out parking spaces, or sell off other equipment, supplies, or facilities that are not essential to your business’s survival and growth.
Create a Business Plan
If you’ve never created a business plan for your small business, now might be a perfect time. That business plan can help you better understand what gives you a competitive edge. Consider your strengths and weaknesses, branding strategy, budget, and sales and marketing approach.
Even if you’ve had a business plan since you first launched your business, now might be the time to reevaluate your strategy and make changes that make the most sense of where you are now and the direction you plan to take with your small business.
Get Advice from Professionals
You may wear ten hats if you’re a small business running on a shoestring budget. While it’s a great way to save money, you might benefit from the advice of a professional accountant or advisor.
Even if you consult with an accountant or hire them to review your business books, you may gain insights into ways you could tighten your business processes, loans you might be eligible for, or even financial planning tips. Even if you’ve been running the business for years without any professional insight, they may offer tips, directions, and money-saving ideas that could help you avoid bankruptcy.
Consider Factoring Your Invoices
With the best factoring company, you can quickly and more easily access the cash flow you need to run your business. Instead of waiting for your customers to pay their invoices, you sell your debt at a discount.
Factoring is crucial if you’re struggling as a small business because it allows you to cover the costs, payroll, and other expenses without waiting for pending invoices to come in. Instead of worrying about how to cover bills, you can start looking at investments and options for expansion that will support your growth and avoid bankruptcy.
Next Step: Keep Up With Your Debt
When faced with the prospect of bankruptcy, you may feel overwhelmed. But you still have options that may turn the tide and help your business stay afloat. Consider trying some of these tips and tricks in this article to ensure your company succeeds.