Running a business can be difficult, and it’s easy to get overextended. It’s almost impossible to grow your business without taking on debt, but too much debt that cannot be refinanced or serviced can lead you to the brink of Chapter 11. Consider the best ways to avoid bankruptcy and keep your business afloat.
Keep Good Records
Don’t underestimate the importance of keeping records, especially when it comes to finances. Companies that put off their bookkeeping often don’t have a solid understanding of their assets and liabilities, and they may find out too late that they are bringing in more expenses than revenue. If you’re not comfortable with bookkeeping, hire a CPA or freelance bookkeeper to do the work for you. Someone should be running your numbers at least every two weeks, though preferably weekly, so you are always aware of your financial situation. This can help you get ahead of issues and avoid business bankruptcy Columbia MD as you start to see the financial decline.
Decide What You Can Do Without
If your business is struggling financially, look at your bank statements, credit card statements and financials to see where you can cut expenses. This is where keeping good records will help you. Talk to your employees about recurring expenses to see if you still need them. For example, perhaps you can stop employing cleaning services if your employees would be willing to help tidy up the office. Sometimes taking a step back like this is only temporary, but doing so can make a huge impact when times are hard.
Don’t Celebrate Too Early
It’s exciting to take on new accounts and set up another department that may bring in thousands of dollars every month, but don’t celebrate until you see the money coming in. Some businesses will react in anticipation of receiving a new deal and make financial decisions based on prospective ventures. It’s not enough to have a promise of payment because that can sometimes backfire. Until the check clears the bank, don’t spend the money.
Calculate With Actual Earned Income
Unfortunately, some customers don’t pay, and you’ll lose clients regularly even if you have a strong organization; that’s just how business works. If you spend all your money buying tools and employing the services of others, you may be financially devasted if you lose even one big account. If you’re conservative with your expenses and always work in contingency plans, you should be fine.