A Look Into Bankruptcy and Getting Back to Even
When your business has been losing and looking like it's never going to be saved, filing for bankruptcy might be an option.
However, it's important to remember that this won't look very good on your track record as a businessman.
Filing for bankruptcy will have negative effects that will compromise your credibility so it would be wiser to consider other alternatives.
Bankruptcy is a legal acknowledgment of a businessman's or corporation's inability to settle debts.
Of course, when a business files for bankruptcy, it cannot make enough money to pay what it owes other individuals or corporations.
Certainly, this will save the business from paying off its obligations.
However, it doesn't necessarily come without a price.
This will naturally create a negative impression on everyone else.
The most serious effect of filing for bankruptcy would be the bankrupt businessman's difficulty in finding creditors in the future.
This is because having been once bankrupt gives an indication that the businessman may not be very capable of handling his finances effectively enough.
And when he can't manage his money properly, he probably can't pay his debt.
Having filed for bankruptcy does not totally eradicate the chance for securing loans ever again.
However, it seriously affects such possibility.
There can be many reasons why a business goes bankrupt but one of the most common is undercapitalization.
Anyone starting a business should have at least a buffer fund equivalent to one year of projected income in order to be safe during this period.
It is simply risky to run a business with nothing to subsidize it during its first few months of operation or until it has started to perform well.
In worst cases, bankruptcy occurs and this becomes nearly incredibly difficult for the businessman to be getting back to even.
The value of a feasibility study for any business, small or big, can never be taken for granted.
When one has studied the possibilities in a clear and structured manner, it is unlikely that bankruptcy will occur.
If the picture isn't too promising at the time of study, a wise businessman would opt not to start something until the prospects look brighter.
Both ways, the incidence of bankruptcy will be avoided.
However, it's important to remember that this won't look very good on your track record as a businessman.
Filing for bankruptcy will have negative effects that will compromise your credibility so it would be wiser to consider other alternatives.
Bankruptcy is a legal acknowledgment of a businessman's or corporation's inability to settle debts.
Of course, when a business files for bankruptcy, it cannot make enough money to pay what it owes other individuals or corporations.
Certainly, this will save the business from paying off its obligations.
However, it doesn't necessarily come without a price.
This will naturally create a negative impression on everyone else.
The most serious effect of filing for bankruptcy would be the bankrupt businessman's difficulty in finding creditors in the future.
This is because having been once bankrupt gives an indication that the businessman may not be very capable of handling his finances effectively enough.
And when he can't manage his money properly, he probably can't pay his debt.
Having filed for bankruptcy does not totally eradicate the chance for securing loans ever again.
However, it seriously affects such possibility.
There can be many reasons why a business goes bankrupt but one of the most common is undercapitalization.
Anyone starting a business should have at least a buffer fund equivalent to one year of projected income in order to be safe during this period.
It is simply risky to run a business with nothing to subsidize it during its first few months of operation or until it has started to perform well.
In worst cases, bankruptcy occurs and this becomes nearly incredibly difficult for the businessman to be getting back to even.
The value of a feasibility study for any business, small or big, can never be taken for granted.
When one has studied the possibilities in a clear and structured manner, it is unlikely that bankruptcy will occur.
If the picture isn't too promising at the time of study, a wise businessman would opt not to start something until the prospects look brighter.
Both ways, the incidence of bankruptcy will be avoided.
Source...