Urgent Steps For Your Business To Take If Bankruptcy Is On The Horizon
The pandemic affected profitability significantly during the last fiscal year. Resultantly, plenty of businesses have become bankrupt, with others close behind. Avoiding financial ruin is tough with COVID-19 still around but taking these seven steps can help.
Look At Your Finances
The first priority is identifying why you’re losing money. This might be because the business was closed during the pandemic. Other factors may include cash-flow issues, equipment costs, unsuccessful investments, and poor budgeting.
Have a financial advisor analyze your spending and pinpoint problem areas. Their insight will highlight where you should make changes.
Consider Staff Redundancy
Losing employees is necessary when finances are dire. The redundancies will depend on staff performance and how essential a person is to the business. A financial advisor can help pinpoint where decisions need to be made.
Salary reductions may be possible if no one is expendable. You should discuss this with employees whose jobs are at risk.
Speak With A Lawyer
Contacting a lawyer is essential once bankruptcy becomes a possibility. Your financial issues could cause spark legal trouble, so it’s best to be prepared and consult a practice that understands local requirements. For example, a Texas bankruptcy firm can help with bankruptcy, restructuring, and recovery for businesses in trouble in that state.
Arrange Deals With Clients
Arranging deals with clients can keep them happy while generating income for the business. Promising them a discount if they pay upfront immediately boosts your finances and delays bankruptcy. The additional time allows you to continue reducing costs and identify solutions with your financial and legal teams.
Offer this as an incentive to both new and existing clients. The former won’t know what you’re capable of but may consider the discount a worthwhile risk. The latter, meanwhile, will trust this is a good deal because they’ve worked with you.
Cut Costs Elsewhere
Removing unnecessary expenses is essential in this situation. This might include eliminating irrelevant software, switching to cloud servers, and outsourcing specialist work. Increasing productivity through these tips will boost employee output and alleviate some office expenses.
Seek Extra Funding
Your current situation might not exclude you from seeking additional funding. If you’ve accrued a little debt, a bank or investor can offer financial support. This will only benefit you if you fix your cash-flow issues before the money runs out. The extra time does allow more breathing room, though.
Go Into Administration
Handing your business to a licensed insolvency practitioner prevents it from being shut down. An expert can manage the business and keep your creditors happy while you work towards a better solution. It’s another way of buying time before going bankrupt.
Keeping track of your finances means you can make these changes before bankruptcy becomes the only option. They won’t guarantee success, but they do offer hope for positive change.