Friday, September 5, 2014


     Free daily tips, information, advice to help you run your small business
     from my personal experience in starting, operating and expanding my own.

     When a business is struggling, many things can be done to rescue it. If that is where you are, see previous write-ups for ways to get your business back on a healthy course.

     But sometimes a business can sour beyond repair. It might be the fault of the economy, or regulations, or technology, or your bad decisions. Whatever the fault, bankruptcy offers you an alternative. 

     You need to know what you're facing in bankruptcy. You need to educate yourself before you visit the bankruptcy lawyer. 

     Basically, there are two types of bankruptcy that you need to investigate. Chapter 7 is liquidation, and Chapter 13 is reorganization. But to get from here to there, do a Google search. You'll find tons of information, background and the differences that might apply to your situation.

     That's if you're thinking of bankruptcy for your own business. Be forewarned, however, that your business can be on the receiving end of someone else's bankruptcy.

     Example: Shelley ordered accessories for her dress shop from a small manufacturer/supplier--jewelry, scarves, handbags, and more. The invoice for the goods always arrived a few days later, giving Shelley 30 days to pay in full. Ten days after the latest delivery came, a court order arrived. The manufacturer had declared bankruptcy. and the court ordered all shipments be returned. Shelley had not paid for the accessories, and she had already sold some of them. Nevertheless, she was caught up in another's bankruptcy. It took time to straighten out the mess, but Shelley survived--and learned a valuable lesson. Never depend on a single manufacturer/supplier for a major portion of things you buy for resale. And always know the practices of bankruptcy courts in your area.

     The ways in which laws are implemented can vary in different areas of the country. I do not recommend handling a bankruptcy yourself--you need to consult an attorney.

     Example: Bill had a problem of a different sort. His printing business had gone downhill as technology marched ever onward. Bill had not stayed on top of advances in printing efficiency and productivity. Former customers left, finding cheaper alternatives elsewhere. Bill's business spiraled down, and finally he was forced to call a bankruptcy lawyer. The Chapter 13 proceedings (reorganization) took time, but Bill managed to save his business by getting it on a better footing. By concentrating on different types of customers, he gradually pulled the business out of the fire. Today, Bill's bankruptcy is behind him. Having gone through a near disaster, Bill is acutely aware of technological innovations in his industry, and he is determined that bankruptcy won't happen again. 

     Small businesses exist in a soup of economic changes and regulation. To thrive, business owners must be aware of what's going on around them. 

     Bankruptcy laws exist to give you a second chance. The time to avoid bankruptcy is before you arrive at the point of no return. Dust off your business plan. Whether you write it down or keep it in your head, a business plan can help you avoid bankruptcy.

     Your business plan is your guide. Take a selfie now and then. Is your operation in line with your business plan? If not, rethink it. (See previous write-ups here on business plan fundamentals.) 

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