It doesn’t matter what type of business you run—there is always the risk of having to file bankruptcy. Often an option that is only pursued as a last resort, companies who are known worldwide can and do struggle with this dilemma.
For example, earlier this summer, the Nine West store owner in Canada filed for bankruptcy protection. Regarded as one of the most known shoe retailers in the country, it’s been reported by CBC News that the store owes upwards of $32 million to creditors.
In the United States, the owner of Columbia House music and movie club filed for bankruptcy this past month, followed by Alpha Natural Resources, Inc. having to filing, too. This company is just one of the latest victims of the coal industry’s downfall.
In a sense, no one is safe, which is why Business Review Canada has put together a list of tips that could potentially assist businesses that fear the possibility of bankruptcy. Depending on your specific type of company, you may discover that some of these options will work better than others.
Pay as much as you can
Before actually filing, speak with your creditors and learn how much you need to pay—the bare minimum—in order to avoid bankruptcy. If you are honest about your debt burden and at least make an effort to pay it off month-by-month, you may discover that some creditors are willing to work with you.
Are you making enough?
If you plan on staying in business, then you need to determine how much money your company needs to bring in each month to survive. Don’t forget to include your monthly debts in this figure, as well as all of your operating fees.
Make a change in management
Depending on how much your business is suffering, you may need to change your management team. After all, putting someone else in charge with new ideas could be quite beneficial to your business. If you want to turn your company’s success rate around, then you will need to make some big changes.
Cut some costs
One of the hardest things about running a business is the need to cut costs. However, if you’re going to save money, then you’ve got to cut back you spending in a few areas. For starters, try to find redundant charges or charges that do not add value to the business. Though difficult, you may even have to let some employees go.
Form a strategy
If you really want to avoid filing for bankruptcy, then make a plan and stick to it. You need to consider all of your options, and what outcomes will be best for you and your business. Your strategy should list various options of what you can do to cut back and earn a profit.
For example, one option that should be pursued is to ask for longer payment terms from your vendors. If they don’t agree, then it’s no harm, no foul. However, if they agree, then you can extend your accounts payable, which will provide an additional source of cash to help fund short-term needs.
However, make sure you also consider your long-term needs and the overall goal—to stay in business and not be forced to file bankruptcy. Also, don’t be afraid to try and re-negotiate all of your contracts.
Hire a specialist
Though it may not seem like a good idea to spend more money, hiring a professional in the area may be your best options. A financial specialist can look at your business, determine where you’re suffering and then make appropriate changes for you. You may gain a sense of comfort by working with someone who has experience in the matter.