Small Business Bankruptcy: When you should file.
Small Business Bankruptcy Avoidance
Small business bankruptcy is serious, and you should decide on this alternative with care. Too often, I have seen small business owners run to their bankruptcy attorney and file at the first sign of financially distress. Of course, the bankruptcy attorney usually encourages the filing. It is a rare attorney that will turn down a $50,000+ payday.
(By the way, if a bankruptcy attorney gives you choices other than just small business bankruptcy, then you know that you have a reasonable and honest adviser.)
From our data, only 1 out of 5 small firms will survive the business bankruptcy filing. The other 4 firms simply cannot afford the legal fees and court costs that can easily reach 6 figures. The fees include your attorney costs, your creditors’ legal fees and costs for any outside consultants and trustees the court decides it needs.
Our advice is to file small business bankruptcy only after trying all other alternatives. In particular, we recommend that you negotiate debt discounts and payment extensions direct with your creditors. You can easily achieve a 40 to 50% discount in your obligations with a dedicated debt negotiation campaign.
In addition, you should improve your cash flow by removing unprofitable units, products, customers and employees. It is normal to lessen the size of your firm at least 60% in any downsizing.
These steps will help you avoid insolvency. Our procedure is from The Insider Secrets to Saving Your Business. You should get this comprehensive publication if you are serious about saving your firm.
In it you will learn how to control your cash, protect your personal assets from lawsuit, create a robust and reasonable turnaround plan and how to find more financing for your firm.
To learn more about the Insider Secrets guide, see small business bankruptcy alternatives.
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