Declaring bankruptcy should be your last recourse when your business is struggling and you’re facing a mountain of debt.
There are several other strategies you can try before you resort to throwing in the towel; Michelle Goodman has a few good suggestions in Entrepreneur.
- Seriously cut your budget: Slashing rent, office expenses, and personal spending is one of the best things you can do when your business has run out of money. Cut out as much as you can; downgrading your office space is one common strategy for saving thousands.
- Find new sources of income: You could start consulting on the side, or get a second job, even if it has nothing to do with your business.
- Negotiate with creditors: One small business owner in the article reports that he called his banks and asked them if they would lower the interest rate in return for him doubling his minimum payment. They agreed. “If you can show them a plan that at least has them getting back more than they would if you were to declare bankruptcy, they’d rather see that than see you walk away,” one of Goodman’s sources says.
- Or have someone else do it for you: Goodman also suggests working with a business debt settlement program — her research indicates that around 75% of businesses who do so end up surviving.
- Adopt better financial habits across the board: Try developing good habits such as going cash-only (or “debit-card only”), and remembering to constantly track everything from sales to conversion rates.
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