Last Updated on Monday, 3 September 2012 03:29 Written by Ebiz Monday, 3 September 2012 08:46
While bankruptcy is a viable option for small business to consider, the repercussions of filing for bankruptcy may not necessarily be worth the trouble. When considering bankruptcy, business owners should have also considered other options such as debt consolidation, debt restructuring and debt settlement first. Compiling and consolidating small business debt into a single more manageable payment may in fact be a smarter option. Debt settlement may also be a better alternative than bankruptcy, allowing business owners to pay pennies on the dollar of the debt they already owe. In restructuring debt through consolidation and settlement, business owners do not have to take the bankruptcy route.
The following are some crucial moves to make for any small business before considering throwing in the theoretical towel to debt and applying for bankruptcy.
Budget for your small business and make changes. A small business will get nowhere if they are still using the original budget that got them into debt in the first place. If a debt seems to be coming up again and again, it is important to take a look at the business budget. Budgeting for the current financial situation of the business needs to be the focus. When budgeting, make sure that your business profits and revenues can cover the basics such as rent and utilities. After the basic necessities are covered, account for supplies for business ventures such as materials and manufacturing costs and make sure you can fit them in your small business budget.
Prioritization of debt payments is also an important step to take. Find out what debts are attached to the steepest interest rates, and pay those debts first. When considering interest rates, also consider whether or not any debts are attached to assets that could be taken away in situations of late (or non) payment. Similarly, these should take priority when paying off debts.
Speak with your creditors, but be honest. Ask your creditor if they have a program for small businesses when they run into financial hardships. You may be surprised what they offer once you open up about your current financial situation to them. Promise to pay the debt back but also make it apparent that you are more liable to pay the debt back in a timely manner if they work with you. Lowered interest rates and ultimately, reduced debt may be some of the benefits you end up with. Payday loans for businesses have been able to help business owners get a step ahead with their finances.
Realize what got your business into debt in the first place and act accordingly. If your business income is low, find out why. Are customers late on payments? Are expenses too high? If so, put more money into collecting, and less into unnecessary business materials.
Go to a credit counseling workshop. If your creditors are unwilling to work with you, maybe it?s time to seek help. Sometimes these sorts of companies will only offer credit counseling to consumers as individuals, yet sometimes they will offer counsel to small business owners as well.
When bankruptcy seems to be the only option, a small business owner should think about the repercussions of filing for bankruptcy first. Bankruptcy will affect not only your business and its assets but also your individual credit score and personal life. Before taking the leap into a final, definite and ultimately irreversible and damaging decision, think about what you as a small business owner can do to avoid this fate. Exhaust all your resources to protect yourself as well as the business you worked so hard for.
This entry was posted on Monday, September 3rd, 2012 at 8:46 am and is filed under Debt. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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Source: http://blog.ebusinessdebtrelief.com/?p=227
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