Bankruptcy has long been a topic that no one in business would ever want to speak of. However, it has come to a point where we’ve seen so many companies sink and disappear thanks to mismanaged financials. Although according to a study made by the professionals at Dun & Bradstreet – saying that bankruptcy numbers have been declining, they are only declining over a small percentage in 2017. This means that a large number of companies are still hitting rock bottom and we as business owners need to be more open and vigilant about this topic.
So, how do we start this conversation about bankruptcy and how to avoid it? We basically start by acknowledging that it is a problem that needs to be solved if it has happened and avoided if it hasn’t.
Here are 4 ways that you can practice to avoid business bankruptcy :
Always Have A Business Plan
The phrase “If you fail to plan, you plan to fail” isn’t just some myth that people spout. It truly does make a difference to a business if you don’t have a plan that works for you and your company. A business plan is extremely crucial to the success of your company. A thorough business plan includes :
- A sales plan
- A sales projection plan
- Market research for your business and product
- A marketing plan (online and offline)
- An operational plan
- Cash flow projection
These are some of the more important components of a holistic business plan. This would then become your roadmap to ensuring your success. It will become the guiding tool for everything that is a working part in your company. This way, you always have a North Star to look up towards when you feel like the company is straying or if things are not working out. It aids with making smarter executive decisions to keep your expenses and revenues in check.
Stop Saying “We’ve Always Done it That Way”
If technology has taught us anything, it has got to be the fact that the world is ever-changing and that we don’t see it planning to slow down anytime soon. This also means that a “tradition” in your company that has been identified to be the reason why your business is slowing down should be ignored and left behind so that your company does not fall apart.
If removing it helps improve performance then it should be removed immediately. Those hard day-t0-day decisions are the ones that will make or break your company and being a successful businessman means that you need to be able to make those decisions for the survival of your company.
Start Being Honest With Yourself
The sooner the better is definitely something you should take into account in this case. Being transparent and honest with yourself and the rest of your senior management will do more good than harm. The reality is something really bad that you might not want to face or admit but it will only cause so much more damage if it’s not dealt with head on – fast.
It would be easy to not say anything but the odds of a complete failure are much higher and it might go to a point of no return and this will cause irreparable damage. The quicker you realise this, the better and quicker the solution.
Change is difficult especially when the company you worked tirelessly for is on the line. However, if push comes to shove and the situation has turned dire, you might want to start thinking of hiring an external counsel to come in and have a look at your company.
Try to make sure that you don’t look at them as outsiders trying to change your company but rather professionals that will probably understand the situation a lot better than you do and will then make the necessary hard decisions that will keep your company afloat.
An outside perspective will always offer a fresh new outlook and perspective to revitalising your failing business. This way, you would not need to hire a new management team and restructure the whole business but rather just take their advice and turn your company around for the better.
If you are having financial problems with your company, look to hire a consultant first as they will probably have a much better outlook to help you save your company from bankruptcy.