No business owner ever wants to hit a rough financial patch, but it happens every day. While many of those rough patches are temporary, some can be too tough for business owners to recover from. That’s where filing Chapter 11 bankruptcy can be a good option, but doing so does mean you could lose your company. However, as any Wisconsin business bankruptcy lawyer can attest, it’s possible to avoid Chapter 11 bankruptcy in the first place. Here are a few strategies to implement.
Negotiate With Your Creditors
Many creditors are willing to negotiate with business owners to ensure that they repay what they owe. Getting the money back is typically more important to them than the interest rates or payment schedule they’ve specified in their loan agreements. If you’re struggling with your current payments, consider contacting your lenders and see if they’re willing to work out a payment plan. You may be able to cut your monthly payments or get an interest rate reduction which could free up cash for your business.
Cut Down on Your Spending
Overhead can cut into your revenue quickly, putting strain on your business’s budget and calling your ability to keep the doors open into question. As soon as you’re feeling the pinch, find ways to cut back on your spending. You may need to reduce your total staff, pause hiring, avoid offering raises, or look for different vendors to partner with who offer the same products and services at lower rates. Saving even a little each month can mean the difference between filing for bankruptcy and getting your company back on track.
Find Ways to Boost Your Revenue
The more money you bring in, the easier it is to cover your overhead and other expenses. Look for ways to boost your revenue and increase your cash flow. If you sell physical goods, consider offering older items at a discount to move products and improve sales. If you offer services, provide a discount for referrals or offer discounts to new and existing customers to engage your services. These simple tactics can help you boost your revenue and increase the chances of your business operating in the black.
Sell Your Business
If you don’t see an easy way out and aren’t interested in filing for Chapter 11 bankruptcy, you can always sell your business. When you sell, you can use the profits from the sale to cover any outstanding debts and give yourself a fresh start. You may even be able to negotiate job security for your current employees as part of the sale.
Selling your business may feel like a last-ditch effort, but it can help you avoid having to file for Chapter 11 bankruptcy while still helping you keep your brand alive.
Consider Filing Chapter 128
Wisconsin wants small business owners to succeed and keep their doors open for as long as possible. That’s why there’s a state alternative to filing for traditional bankruptcy. Chapter 128 lets you enter into a repayment plan with your creditors so you can avoid filing for bankruptcy and get your finances back on track. If you’re interested in Chapter 128, it’s a good idea to consult with a Wisconsin business bankruptcy lawyer as soon as possible. They’ll help you decide if it’s the right move for your business. And if you determine that filing for Chapter 11 bankruptcy is a better option, they can guide you through the process.
Schedule a Free Consultation
While these preventative measures can help you avoid having to file for bankruptcy, you may find that bankruptcy is in your best interest. At Kerkman & Dunn, our experienced Wisconsin business bankruptcy lawyers can help you figure out your best next steps. Contact us today to schedule a free consultation.
