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5 steps to take when your business is in financial trouble

On Behalf of | Nov 18, 2021 | Bankruptcy |

When your business is struggling and you think that a bankruptcy may be on the horizon, it’s time to look into the steps you can take to keep your business open and avoid bankruptcy. While a business bankruptcy can be helpful for many people, it isn’t always the right solution when you’re struggling to make ends meet.

Here are five steps to take when your business starts to have financial issues.

  1. Check your cash flow

With business, one of the main causes of bankruptcy is a lack of cash flow. This is where you should start when you’re looking to stay open. See what kind of income is coming in, and do your best to cut down on expenses. In the short term, you may be able to balance your books long enough to get through a tough economic crunch.

  1. Keep paying your tax bill

Another thing you need to do is to pay your tax bill on time. Taxes can come back to haunt you and, in some cases, you could be held responsible personally for taxes your business didn’t pay. Bankruptcy can’t help with taxes in most cases, so keep up on them the best you can.

  1. Look into cutting back on employees

If you’re paying salaries to 10 people but only have work for four, it’s time to start cutting back. A layoff, even if temporary, could help you avoid losing more than you’re bringing in.

  1. Be honest with your creditors

If you’re starting to have trouble paying what you owe, call your creditors and lenders. Explain the situation, and see if there is a way to work out a payment plan for any past-due amounts.

  1. Sell your business

When push comes to shove, selling your business may be the best way for you to walk away without a bankruptcy. If you can sell the business to someone willing to take over the contracts and debts, then this might be a good solution to help you avoid closing the business.

These are five tips to help when your business is in trouble. Think carefully about the options that you have, and remember that bankruptcy could be a solution that is right for you in some circumstances.