It is the norm for a small business owner to feel elated and optimistic when starting out in a new business. However, when the business has fully commenced, the reality of the intricacies involved in running a business starts to dawn on the business owner. The troubles of dealing with customer service, overhead expenses, suppliers and striving to make a good turnover can be overwhelming.
If your business is not thriving as you had expected and the mounting cost of running the business are driving you to consider bankruptcy as an option, you should reflect on these alternative options before filing for bankruptcy.
Make Management Changes
A change in management may be what is required to revitalize a liquidating business, improve operational procedures and increase business bottom line. A fresh management may be able to effectively tackle problems that have proved impossible to the failing management. If you are the head of management, you may consider employing the service of a qualified manager while you assume the position of the business owner. Although it could be difficult to watch someone else manage your business, a neutral entity may be in the best position to make the changes required to attain profitability.
You can opt to renegotiate the terms of agreement for lease, suppliers, and loans. This may give your business a better opportunity to increase cash flow and reduce indebtedness. You may tell your suppliers and other stakeholders that you are considering bankruptcy, they are likely to back down on unfavorable terms and oblige to more encouraging conditions. Increasing the payment cycle for suppliers and shortening the payment time for customers will increase the business cash flow. Loan consolidation can also lead to significant increase in reduction in interest rate which will give your business respite from loan burdens.
Implement Big Cuts
At the face of impending bankruptcy, it is time to make resolute changes such as drastic cuts. You may also consider engaging part-time staff rather than full-time workers or consider remote teams of offshore staff to perform tasks until you get back on your feet. Consider reducing overhead cost such as expensive rent locations. Cutting down on your cost is vital to preventing a total collapse, you should be resolute and make the required changes.
There are assets that your business owns which are not vital to the operations of your business. Consider selling investment properties or relocate to a more modest location for your primary home instead. You may sell some of your business assets in order to increase the running capital of the main branch.
Bring in a Consultant
There are some consultants that specialize in reviving declining businesses. Although this will cost your business extra money, but the service may be what is required to get your business back onto its feet. A consultant can devise ways to cut down on cost, increase profits or break into new untapped markets.
Pertaining the financial aspects of the business, a consultant can help outline debt restructuring and other steps that will make the business debt more manageable. Your consultant may work in conjunction with an attorney to make a debt-for-equity swap which allows your debtor to own a stake in your business as payment for a debt owed.
Hire an Accountant
A lot of business make the fatal mistake of operating without a bank account or a qualified accountant to ensure you are meeting your tax obligations. You may be awesome at running the core services of your business. However, you have to leave the books to the financial experts. Employing the service of a professional accountant (be it full-time or part-time) may be all that is required for your business to stay afloat.
Liquidate the Business
In a scenario where you cannot find a way to revive your business, it may be time to pay off your debts by selling off your business and its assets if required. This will effectively circumvent the need to file for bankruptcy. You may be able to negotiate settlement terms with creditors such that taking legal action against you will be unreasonable. If you can sell your business and be debt free, your life will be free of stress and you can always try a startup with your entrepreneurship skills another day.