All business owners realize the importance of generating enough revenue. This can help keep the company afloat and aid in growing the business, regardless of what offerings you may have. If your business is unable to gain enough net revenue for a long time, you can face serious consequences, including bankruptcy. This is not to say that this is the only reason business owners often go bankrupt.
Sometimes, inadequate funding can lead to bankruptcy. The inability to secure additional funds can make it difficult for the brand to survive. You also need to watch out for poor planning and decision-making. These can lead to an increased risk of making costly mistakes. These are just the common causes of business bankruptcy.
While generating enough revenue and having a positive cash flow are good, these won’t guarantee that you’ll win against bankruptcy. Now the question is: Should you start filing for bankruptcy, or would it be better to find a way out? The following are four factors that can help you decide which path to take:
Your business lawyer
One factor to consider before filing for bankruptcy is the advice of your business lawyer in Utah. The expertise of a legal professional is a valuable resource that can help you determine whether bankruptcy is a good choice. The proceedings can be extremely complicated. They can be of great assistance and can guide you through the process in case you wish to pursue filing for bankruptcy.
The type of bankruptcy
One has three business bankruptcy types to choose from. Some business owners choose to continue with business operations. If you firmly believe that your business still has a viable future, you can choose a business reorganization. Do you have no substantial asset, and is restricting the business is no longer feasible? Then a business bankruptcy is in order. For sole proprietorships that wish to file and repay your debts instead, you can opt for a repayment plan. You will need to cite a comprehensive detail that will show how you plan to pay off your existing debts.
Your credit score matters—we already know this. But bankruptcy will show up in your credit report for about ten years. The good news is that the power of a bankruptcy report can diminish over time. Also, it is essential to note that bankruptcy may or may not negatively affect your credit. Of course, this is dependent on the type of bankruptcy you’ll be filling for.
Publicity of bankruptcy
One may think that since financial data is involved with bankruptcy, the public won’t take notice of this. In reality, this is public information. There is a big possibility of your competitors and family knowing about you filing for bankruptcy. Of course, unless you’ve already established a household brand, only a few will care about this information.
No business owner would dream of having to file for such a case. However, sometimes, bankruptcy can be your saving grace. Before filing, make sure to consider this list first. Knowing what is at stake and how bankruptcy can affect your life can help you with navigating your situation and making the best decision.