Bankruptcies of all types are at an all time high and because of the economy, small businesses are failing right and left. Don’t let your small business be part of that statistic.
Here are some suggestions from personal and corporate bankruptcy attorney Edward E. Neiger, founder and partner at Neiger LLP to help you.
1. Be Proactive. Don’t let receivables, the money that you are currently owed by your customers, become too dated. And don’t let your customers think they can take advantage of you or they are more likely to try.
2. Think Outside the Box. Consider alternate forms of payment for goods or services. For instance, maybe a customer is an interior designer and can help redo your shop, or owns a plumbing business and will offer his or her services in return for yours. It never hurts to ask and can save hundreds “if not thousands” of dollars.
3. Honesty. Stay on good terms with your bank or financial institution. They don’t like surprises. They would appreciate honesty and will reward you if you need a forbearance, an arrangement to postpone a borrower’s monthly payment for a limited and specified time period. or simply extra time to make a payment.
4. Alternative Financing Sources. Think of different sources of financing if you don’t believe you will be able to make a monetary payment on time. These alternate sources, such as consignment, home equity loans, vendor financing, and customer prepay, can make it much easier for you to get financing because your back isn’t against the wall.
5. Start A “Workout.” A work out may contain a variety or combination of different options, including (i) forbearance, (ii) payment of interest only, (iii) reduction in principal, (iv) extension of terms, (v) provision of additional security. The goal of a workout is to keep the bank or financial institution in an as good of a position with the alleviation of the short-term obligations of the business.
6. Be Realistic. Sit down and asses your short- and long-term business needs – and then live within those guidelines. For example, if you anticipate a decrease in a certain area of your business, you should decrease expenses related to that area.
And I will add, assess your goals. Are you doing something every day to help your business grow and thrive? Don’t just spend your time being busy.