Owning your own business is exciting and liberating. At the same time, it takes many long hard hours of work to keep it afloat -- and even more to make it profitable. If your business is already traveling down a rough financial road, you may be nervous looking ahead to 2007.
The Cold, Hard Facts
The unfortunate reality is that 2007 is not looking like a good year for small businesses. Experts predict an economic recession making business bankruptcy more likely for small companies. Even in a good economy, one in ten small businesses fail during any given year. Therefore if a recession occurs, I predict two or three in ten small businesses will shut their doors.
Preventing Business Bankruptcy
If your business is struggling right now, you must take steps immediately to prevent it from becoming a statistic in 2007. Be aware the grim economic forecast isn't going to help you. You might be asking yourself, "Why should I worry? Won't business bankruptcy save my company?"
What many business owners don't know, and what they don't discover until they are halfway down the road, is that business bankruptcy is costly. A filing can run upwards of $50,000 and $100,000 or more is not uncommon. Filing Chapter 11 business bankruptcy is easy, it's successfully emerging from it that's hard. You can lose control of your business to the court appointed trustee and the committee of creditors the bankruptcy judge forms.
Also at any point, the judge can (and often does) turn your Chapter 11 bankruptcy into a Chapter 7 liquidation bankruptcy without your approval. What does this mean for you? You will have to shut your doors and sell everything to pay your secured creditors.
Fortunately as a small troubled business, bankruptcy isn't your only choice. As you might guess, it isn't even a good one.
Here's your best alternative.
Turn around your business. With a business turnaround, you completely avoid bankruptcy court and maintain control. And you'll save at least $50,000.
Here's how.
Learn as much as possible about managing your business and turning it around. And doing this isn't as difficult as you might think. It doesn't require paying a consultant to comb through your financial paperwork. Instead identify other business turnarounds and read up on proven business turnaround methods. Your ultimate goal is to create a practical turnaround plan.
Creating a Business Turnaround Plan
In my 11 years of turning around companies, I've decided that every turnaround plan should include 14 basic steps, these are:
* Understand and accept the status of your business
* Take control of your money
* Predict the money your business will bring in
* Look for ways to save money for your company
* Cut your trade debt
* Layoff employees that are not productive and don't fit the plan
* Collect all debts from your customers
* Sell your receivables if you have any
* Restructure long-term agreements
* Restructure long-term bank debt
* Sell assets that are not productive
* Sell all product lines, divisions, and plants that are losing money
* Consider sales and leaseback of property and major equipment
* Search for alternative finance sources
By following this 14 step plan, you will soon get your business back on the road to success and will avoid business bankruptcy altogether. You do not need to hire someone to help you go through these 14 steps. After all, nobody knows your business better than you do -- so take your business into your own hands and avoid becoming another statistic in 2007!
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