Small Business: 6 Ways To Salvage It From Bankruptcy!
Let’s get one thing straight; starting a business is hard. When you start from scratch, you are basically treading on a high wire with a huge load on your back. If you’re not careful where and how you walk, it will be the end of everything. With poor management and strategy, it will bring down the whole enterprise.
It is due to this dire situation that we have no other choice but to file for bankruptcy. But it doesn’t have to be like that. In this article, we will share a couple of principles that will save your company from crashing.
- Determine the amount you owe to creditors
In order to avoid the burden of debt, you need to find out how much you have to pay your creditors. Ensure that the debt is low just so you can avoid bankruptcy. Be sure to keep a fixed amount you owe for each month. This way you will be able to manage finances better.
- Find a way to earn more
An obvious notion if there ever was one. Operating a business would have been a lot easier if there was more money lying around. Without a pinch of capital that would help keep your company afloat, it would be hopeless to carry on. You have to find the root of the problem which is playing at the failing economy of your brand. And you can only do this with said capital.
Your only tactics at this point would be to either borrow money or have your investors back you up. You may need to liquidate some of the assets of your business or else revise your balance sheet for a better edge.
- Have an updated business plan
To see the best results come out of what you do, you have to have a plan. A well-managed company has to have a proper business plan to be able to thrive in the long-run. This plan must include a marketing and sales plan, capital-expense budget, operating plan and cash-flow projection.
With it, you can account for the finance, budgeting, sales and operations of your business. This is what will enable you to keep all of your expenses and revenues from falling out of balance. Bear in mind to keep your business plans updates as soon as the markets change.
- Calculate maximum cost level
Here come some of the most painful tasks – the costs. You’ll have to consider the costs of raw material, inventory and operating costs like rent, labor, utilities, interest and income taxes. First, subtract the total monthly debt burden from the average sales, and then add your personal income in this.
- Always Be Accurate About The Results
You have to be extremely careful when presenting your financial reports to your CEO. When making the report, it is essential that it does not contain any missed journal entries, flawed footings or inaccurate accruals. A thorough revision of the report is thus, strongly advised.
- Make A Change In Management
Sometimes, the concepts and people we have for a business does not always give us what’s best for it. We should, therefore, take this as a signal to make some necessary changes for the sake of the future. This means coming up with ideas that can help the company prosper as well as getting the right people to produce the right results.
There has to be a great change in management or at the very least, admit that the present state of the company is not working. We should warn you, however, that some of the changes may be harsh, but if your company doesn’t get in touch with the right people, it won’t stand a chance for the days to come.
Now you have a chance to save your small business by following all of the points given above.