If you own your own business, finances probably take up a big portion of your thoughts on a daily basis. Especially if you’re in hot water financially, you may be spending the vast majority of your day and your business attention trying to keep your company afloat. But with bankruptcy looming in the background, many business owners get paralyzed from fear and wind up hurting their business rather than helping it. So to keep this from happening to you, here are three ways you can steer your business away from bankruptcy.
Cut All Unnecessary Spending
The first thing you should do when you’re worried about having to file for bankruptcy with your business is to cut all unnecessary spending. Even if you feel like you’ve been running a pretty tight ship, there are likely places that you can still trim down a bit. According to Ephrat Livni, a contributor to FindLaw.com, it’s crucial that you look at your finances very critically at this point and cut the fat wherever possible. Because if you do end up filing for bankruptcy, the courts will also be taking a look at your finances and seeing where you made mistakes and could have saved your business. While it might be hard to lay people off or use a different vendor, it may be something you just have to do for a short time.
Be Careful With Preference Payments
When you’re worried about having to file for bankruptcy, you may also begin worrying about how you’re going to pay back those family members or friends who invested in your business. However, it’s vital that you’re very careful with how you pay back your creditors at this point. According to Nancy Laws, a contributor to the Huffington Post, those who you made preferential payments to before bankruptcy could end up losing that money. Thereshouldn’t be any preferences made to your personal contacts who you owe money to; you need to try to pay back all your debt equally. This will keep both your business and your creditors out of trouble if you do end up filing for bankruptcy.
Be Decisive Yet Wise
There’s no better time to be a wise yet decisive business owner than when your doors are on the verge of closing. Karsten Strauss, a contributor to Forbes.com, warns that while you might be tempted make rash decisions that you think will save you money, it’s pivotal that you don’t make stupid decisions that could put your company in an even worse situation, either with your finances or with your customers and clients. So while you want to act quickly, make sure you’re doing your best to still make sound decisions.
If you’re concerned about the financial stability of your business and are worried things could go south quickly, consider using the tips mentioned above to help you move your business away from the brink of bankruptcy.