Over 100,000 small businesses have closed since COVID-19 began. More than 70% of them worry about long-term financial impacts. If you own a business and want to avoid bankruptcy, these strategies can help.

Business Restructuring

Restructuring gives you flexibility to stay afloat without closing or declaring bankruptcy. Work closely with your accountant to create a feasible budget, negotiate with creditors, and set up payment plans for debts. By taking action early, you increase your chances of recovery.

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. 

Prioritize Debts 

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.  

Get Creative

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.