Over 100,000 small businesses have closed since COVID-19 began and many of them (over 70%) are worried about the long-term financial impacts due to closures during the pandemic. If you are a business owner and are trying to avoid bankruptcy so you can keep your business afloat, read on.
We have some tips to help you avoid this. Read on to learn more.
Restructuring your business is an option you can take to avoid bankruptcy and get out of financial distress. This gives a business the flexibility to find ways to stay afloat without closing or declaring bankruptcy.
Working closely with your business’s accountants can helo you to develop a feasible budget, negotiate with creditors, and create payment plans for outstanding debts.
Liquidate Assets and Evaluate Spending
Just as you need to evaluate your spending when you are facing personal financial crises, you need to do the same with your business. Cut back on unnecessary expenses, consider furloughs or layoffs, and liquidate assets you no longer need.
Any expenses that are luxuries or nonessential should be cut. No more lunches out, catered meetings, or subscriptions that don’t add any value to your business and are simply costing you money.
Part of your restructuring plan should include working with your creditors. Paying your debts or restricting them has to be part of your plan to recover your business. Lenders lend you money because they trust that you are going to repay them and they trust that your business is strong enough to take the chance on lending you money.
Make sure your debts are high priorities in your recovery plan. While you might have to make difficult decisions to furlough or lay off employees to do this, you don’t want to risk ruining your business credit and losing any chance that you have to get loans or lines of credit in the future.
Saving your business might require some creativity and thinking outside the box. Some potential strategies could include barter agreements, where you barter with other businesses for goods and services and no cash is exchanged, consignment agreements, owner financing, and settlement agreements.
While these strategies may not be ideal, they can help you hold on to your business when you otherwise would have had to file for bankruptcy.
Consult an Attorney
Even if you don’t end up filing for bankruptcy, speaking with an attorney who specializes in business law is a wise idea. They can help you make changes to keep your business, advise you on what to do to avoid bankruptcy, and potentially get you back on track to making your business profitable.
Use These Strategies to Avoid Bankruptcy
Most business owners want to avoid bankruptcy at all costs. It will likely be an uphill battle, but by employing the strategies included here, you can start to bring your business back from the brink of financial ruin.
The experienced attorneys at Boyer Law Firm P.L. can help you get things back on track. Contact us today for a review of your business’s legal needs.