Nobody goes into a business planning to fail. Borrowing money to get it started and keep it going is to be expected. Unfortunately, within five years, half of new businesses are gone. To try and stay afloat, some owners continue to borrow in hopes that times will get better. Most of them end up needing serious business debt help.
If you are spending more money than you are bringing in, the obvious solution is to cut costs. That can be easier said than done, and some owners consider drastic measures like laying off staff before sitting down and going over every expense and looking at which ones are extraneous. You are probably wasting a lot more money than you realize.
Offering credit to customers might seem like a great marketing gimmick, but if those customers take advantage of the courtesy, you could end up with a lot of outstanding debt on your books. If this is the case, you should contact customers with credit lines. You might offer them a future discount if they zero their balances. If you owe money to creditors and suppliers, you need to call them and let them know when they can expect a payment.
Loan consolidation can be helpful if you have several small loans you are trying to pay off. Restructuring the debt may even lower your interest rate. You might hire a company to handle the consolidation on your behalf. They can negotiate with your creditors and collect a payment from you each month to pass on to the lender. The time this company saves you might be worth the cost.
If you finally come to the decision that saving the company is too difficult, and you just want out, selling the business is always an option. Depending on your situation, this could be a good solution. You will need an experienced commercial Realtor. If you find a buyer, you will have to pay your creditors at closing, and you get whatever is left.
If selling the business as a whole is unsuccessful, you can sell it piecemeal. Liquidating the assets individually will include selling the real estate separately from the inventory. Your creditors may have to agree to accept partial payment from you as part of the sale. Some will accept because that's easier and less time consuming than suing you. If others are reluctant, they might be agreeable to an arrangement where you pay them the remainder after the sale.
Filing bankruptcy is always an option although it should be at the bottom of your list. You can attempt to save the company by filing chapter eleven. This will work if you have a viable company and reversible debt. If the business is a lost cause, you can file chapter seven. This will get you out of arrears, but will also ruin your personal credit.
Borrowing money to start a company or expand an existing, is not a bad thing. Borrowing too much money and becoming overextended can be a very bad one. Smart businessmen know the difference.
If you are spending more money than you are bringing in, the obvious solution is to cut costs. That can be easier said than done, and some owners consider drastic measures like laying off staff before sitting down and going over every expense and looking at which ones are extraneous. You are probably wasting a lot more money than you realize.
Offering credit to customers might seem like a great marketing gimmick, but if those customers take advantage of the courtesy, you could end up with a lot of outstanding debt on your books. If this is the case, you should contact customers with credit lines. You might offer them a future discount if they zero their balances. If you owe money to creditors and suppliers, you need to call them and let them know when they can expect a payment.
Loan consolidation can be helpful if you have several small loans you are trying to pay off. Restructuring the debt may even lower your interest rate. You might hire a company to handle the consolidation on your behalf. They can negotiate with your creditors and collect a payment from you each month to pass on to the lender. The time this company saves you might be worth the cost.
If you finally come to the decision that saving the company is too difficult, and you just want out, selling the business is always an option. Depending on your situation, this could be a good solution. You will need an experienced commercial Realtor. If you find a buyer, you will have to pay your creditors at closing, and you get whatever is left.
If selling the business as a whole is unsuccessful, you can sell it piecemeal. Liquidating the assets individually will include selling the real estate separately from the inventory. Your creditors may have to agree to accept partial payment from you as part of the sale. Some will accept because that's easier and less time consuming than suing you. If others are reluctant, they might be agreeable to an arrangement where you pay them the remainder after the sale.
Filing bankruptcy is always an option although it should be at the bottom of your list. You can attempt to save the company by filing chapter eleven. This will work if you have a viable company and reversible debt. If the business is a lost cause, you can file chapter seven. This will get you out of arrears, but will also ruin your personal credit.
Borrowing money to start a company or expand an existing, is not a bad thing. Borrowing too much money and becoming overextended can be a very bad one. Smart businessmen know the difference.
About the Author:
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