Running a business is not easy, and the threat of insolvency always looms over one's head. Now, insolvency essentially means that you are not able to repay your debts on time. This means that a company’s liabilities are higher than the value of the assets it possesses. Still, this doesn’t mean that the end of the world is here. Sure, you may be in trouble, but you can always succeed in getting out of it.
The first thing you should do is ask for professional advice. Every business is different, and rules and regulations vary from place to place, and country to country. Even local country laws can differ significantly. That’s why you should think about hiring professional insolvency services, at the very least. Talk with lawyers, financial advisors, accountants. However, if you would rather avoid that kind of cost, we also advise you speak with some other entrepreneurs. Seek out people who have been in your line of work for years. Many have faced insolvency, even the most successful ones. They can certainly give you some advice.
You would be shocked how many successful entrepreneurs went bankrupt at one point or another. It’s just a part of doing business. So, you shouldn’t feel ashamed or disheartened because you are asking for help.
This may be the last thing you want to hear, but it still needs to be said. Namely, you have to stay calm. Do not make things worse, do not spiral into destructive behavior. Furthermore, stay in the moment, don’t attempt to fix everything at this very moment. Facing insolvency is not pleasant, to say the least, and you need to think clearly. Otherwise, you will make poor decisions and you will make mistakes.
Try to rack up even more debt when you are in this situation. Don’t finance everything with your credit card, and hope it all goes your way. If the worst does happen, you will be in even greater trouble than before. Of course, this goes without saying, but do not skip on paying taxes or legal fees. Without even going into the fact that it’s illegal, penalties and fines regarding skipping taxes are insane, and will pretty much sink your credit.
One of the things you can also do is reorganize and restructure your business. This can literally mean reorganizing systems and hierarchies in your business, allowing you to minimize costs. In other words, maybe your company could have been organized better a long time ago. Think of as trimming the fat.
On the other hand, you negotiate with creditors, mix up your assets, and think about how shares are allocated. Furthermore, if you can, you should restructure the loans you owe. Convince your lenders that if they give you better deals now, you increase the chance of fully paying them off later.
Sometimes all you can do is sell. Perhaps you have a very profitable division that will mesh well with a new owner. Maybe your assets are very unique and valuable. Or maybe you just need new management. Whatever the case may be, it can help you avoid full-on bankruptcy.
On the other hand, you can liquidate. You sell the whole thing in pieces, for a lower price. However, it can be very viable if selling outright is not an option. Still, it's not an easy thing to pull off, but it can help you “restart” in a way.
Business insolvency doesn’t mean your life is over. Yes, it is very difficult, but there are things you can do. Before you decide to sell or liquidate, see if you can restructure. Think long and hard about the organization of your company. Trim the fat if you can. And remember to stay calm. It will help you make the right decision, and assist you in minimizing the damage.
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