Entrepreneurship is a lot like football; you win some, you lose some, but at the end of the day it takes a whole season to decide the winner. Hence, in the world of business — same as in football — instead of dwelling on past defeats, you need to set your eyes on the future and prepare yourself for that next big game. Bankruptcy, in general, can be especially hard to deal with. Yet, there are ways of overcoming it, entirely; but don’t just take my word for it. Keep on reading and see for yourself.
Understand what bankruptcy actually means
In essence, bankruptcy does not necessarily mean game over; there are different types of bankruptcies that can occur within the business sector, each with their own set of rules and regulations. For instance, let’s take a look at the three most common cases of bankruptcy in the U.S., and their impact on businesses in general. If you’ve filed for Chapter 11, your business can remain operational and continue working as before, albeit with the supervision of a trustee, until all debts are paid. On the other hand, by filing for Chapter 7 you’re effectively liquidating your business. Meaning, you need to start an entirely new business from scratch. Lastly, Chapter 13 is used exclusively for sole proprietors who wish to retain their personal assets in the case of bankruptcy. Hence, your rebounding efforts will depend largely on the type of bankruptcy you’re facing.
Keep a winning mentality
Everyone makes mistakes, and bankruptcy is nothing to be ashamed off; even Donald Trump, ex-businessman turned president, filed for business bankruptcy at least six times. Therefore, the worst thing you could possibly do is just give up and skip country; you need to fight it head on. So, bite that bullet and don’t let your past failures hold you back; consider them as a valuable learning experience. Stay motivated and resolute, and never doubt yourself — that’s a loser mentality — as, at the end of the day, you haven’t lost anything important (skills, knowledge, creativity, etc.), just money.
Set attainable goals
Change is never easy. Yet, the same way you make a list of resolutions regarding your physical, and mental, health during New Year’s Eve, you ought to make a special list reserved, exclusively, for your financial resolutions as well. To put it in a nutshell, you need to set realistic goals for your small business. For instance, if your goal is to save, say, $5,000 by the end of the year, you have to take small steps, every month, to accommodate that particular goal. This means, cutting back on unnecessary work lunches, and dinners, making a few lifestyle changes, and keeping a neat financial hygiene at all times. That way, with each small victory (milestone), you’ll be one step closer to accomplishing your goal.
Create a budget
Once you have a clear idea of what your goals are, you need work on formulating a solid business plan around them. Start with your budget. Take a good look at your inventory, calculate all your business expenses, and overhead costs until you reach the absolute minimum needed for the day-to-day operation of your business; and stick to it. If you use one budget for both your business and your personal expenses, separate them ASAP. The last thing you want to do is take money from the cookie jar and not know exactly where you stand with your expenses at the end of the month. Additionally, you should be saving around 10% of what you earn (each month) for an emergency fund, just in case, while also working towards your retirement plan.
Consolidate your debts
Focus on paying off all your debts, personal as well as business; you’ll breathe a lot easier. Start by repairing your bad credit history to re-gain the trust of your suppliers and vendors. Essentially, you want to show them that you’ve learned from your past mistakes, and that you’ll be doubly careful going forward. Pay all of your bills in full, each month, and make sure you don’t miss out on any outstanding payments. Likewise, some credit cards even offer reward programmes where you can collect various reward points for your punctuality, so keep a lookout for those as well.
All in all, there’s still life after bankruptcy. Whether you continue with your old business or start anew, remember to never lose hope; even if you lose that one battle, you still haven’t lost the war.