- One reason businesses fail is the amount of debt they incur when things start to go south.
- Another way to pay off debt while, at the same time, you clear the slate, is to liquidate the company's assets.
- Before a complete shutdown, you want to prepare a business plan that details the positives a buyer would receive.
Though you have the best intentions when it comes to your business, there are some instances where things don’t work out. Be it a downturn in the economy. unstable finances, or health emergencies, one thing can cause your company to falter. Eventually, it can’t stand the strain and collapses.
Your business wouldn’t be the first one this happened to. One in four Canadian businesses fails within the first 10 years. Some of them don’t get further than the first year of operation. It certainly hurts. However, it’s not the end of everything.
Still, some things need to be done when your business goes under. Here are a few suggestions.
One reason businesses fail is the amount of debt they incur when things start to go south. The amount can be so huge that there’s no foreseeable way to pay your vendors or creditors. A way to help ease this burden is to declare bankruptcy.
As with other financial plans, bankruptcy has its pros and cons. A plus is you don’t handle it by yourself. A representative called a bankruptcy trustee takes lead. The role of a bankruptcy trustee is to work through all debts by contacting everyone owed. In turn, these individuals, found at places like Bankruptcy Canada, help consolidate debt and even find ways to close creditor accounts.
The con to bankruptcy is it remains on a credit report for several years. Even after the debt is paid off there’s still a chance you won’t get further financial assistance to start a new business while it remains on your report.
Another way to pay off debt while, at the same time, you clear the slate, is to liquidate the company’s assets. This can be office equipment, technology, or even a building you purchased for the company.
One form of bankruptcy does this for you. the trustee reviews all of the physical and intellectual property you possess and determines if any of it can be sold. If that’s the case, your debt is paid off. If not, you need to find another way to sell the products.
Sell The Business
The failure of your business doesn’t mean it’s over. There have been instances where a company was about to close but then was rescued by another organization. Sometimes, this was a competitor. In other situations, a business looking to expand their opportunities decided to take the company off of someone’s hands.
This can happen for you as well. Before a complete shutdown, you want to prepare a business plan that details the positives a buyer would receive. Though it’s hard to say good-bye to something you put all your effort into, it also helps you financially. In some cases, the other organization purchases your business along with its debt.
There are plenty of entrepreneurs who started a business only to have it fail. Rather than dwelling on it, they learned their lessons and started a new company. If that one failed, they would move forward on a third model. Eventually, they found their niche.
Follow the example of these individuals after your business goes under. Its failure doesn’t mean everything else you do won’t work. On the contrary, you can take the things that operated well and utilize them to build a new company.
It’s what people have done for decades. Some of the most well-known products wouldn’t exist today if their creators had given up. Don’t let the closing of your business make you stop.
Take A Breather
However, before you dig back into the creation of a business consider taking a break from it all. The loss of a company is similar to the death of someone. You’ll need some time to go through all the stages of grief.
Do something else for a bit to get your mind off the failure. Concentrate on hobbies or other interests that went by the wayside as you attempted to keep your business afloat. This time can inspire you toward new ideas for your next business.
The good news is you can survive after your business goes under. It will be hard for a bit, but you’ll eventually come around and be ready to make another go at it. In the end, that’s how successes are created.