Did you know that around 50% of all businesses will fail in their first year? More shockingly is that within five years as many as 95% of businesses will have gone bust. The main reason for this? Debts! One of the things to come to our minds when faced with crippling debts is to give up, apply for bankruptcy and draw a line under this chapter. However, there are other ways to deal with small business debts that can avoid this route altogether, and some provide many additional benefits too. Before we look into the bankruptcy alternatives, follow link to discover your credit rating and understand your score – as well as how to improve it.
Doing Nothing – the easiest and the riskiest alternative. If your business still has assets then your creditors will be quick to get their hands on them which will mean you’re left with absolutely nothing to show for your efforts. Doing nothing will contribute greatly to your ability to gain credit in the future; why would anyone trust you?
Closing the Business – this will involve the liquidation of assets and the negotiation of settlements with your creditors:
- Liquidation of assets – If you’re able to sell your assets yourself then you should, this will by far bring the greater price.
- Negotiating with Creditors – Many creditors will accept a smaller settlement than the money owed. If they don’t then they have to pay to file a lawsuit against you, which often won’t be cost effective.
Selling your Business – It can have many more advantages to sell your business than to liquidise it. In addition to this, dealing with one person is a lot easier than dealing with many through the process of liquidation. This isn’t an option for all, if your business debts exceed the assets then you could be hard pushed to find a buyer.
Find a Partner – Although your small business may be your baby, it can be better to find someone to share it with rather than lose it altogether. Finding someone willing to invest in a sinking business can be difficult, and it will often mean that you have to give over the majority of the reins to someone new, rather than a 50/50 split. However, it will mean that you still have your business, whether it be a tiny part or not.
I believe in many cases it boils down to the fight or flee instinct we all naturally have. Whereas some of us are quick to give up and flee the situation, others will look at ways to overcome it. Remember that there are always choices available and that giving up is never your only option.
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