There are many reasons why a company could face a financial hardship. For instance, a new product may not have sold as well as it was projected to. It is also possible that a judgment against the business left it without any cash to pay bills. Let’s take a look at some ways that your company can navigate a financial crisis.
Be Honest When Assessing the Situation
It is important that you are honest about the situation that you are facing. Ideally, you will make a list of all the assets available as well as the amount of debt that the company has. Doing so will make it easier to determine whether you want to sell those assets or raise money to pay off debt or build a larger cash reserve.
Bankruptcy Isn’t Necessarily the End
Filing for bankruptcy isn’t necessarily the end of the company. By filing for Chapter 11 protection, a business can reorganize its debts and renegotiate contracts with employees and vendors. It may also be possible to prioritize which creditors get paid and when. Companies both large and small have filed for Chapter 11 bankruptcy with some coming out stronger than before they filed.
Find Ways to Increase Revenue or Cut Costs
If you decide against filing for bankruptcy, it will still be necessary to find ways to either increase revenue or cut costs. This may mean charging higher prices for your product or service. It could also include finding ways to upsell your current customers. Cutting costs could be as simple as laying off workers or cutting back on their hours.
Hire Legal Counsel
Hiring an attorney may be an effective way to negotiate with vendors or others who may need to approve alternate payment plans. An attorney such as those from McElrath Law may also be able to help the company file for bankruptcy if that is what you choose to do. Your legal counsel may also be able to communicate with the media or creditors on your behalf, which allows you to spend more time focusing on overcoming the financial hardship itself.
While you never want to experience a corporate cash crunch, there are many ways to navigate through them. Whether you file for bankruptcy, upsell customers or terminate employees, it may be possible to overcome the problem and guide your business to a successful future. As long as you are honest about the cause of the problem, your customers will likely stick with you until things get better.
About the Author: Lizzie Weakley is a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. In her free time, she enjoys the outdoors and long walks in the park with her husky Snowball. You can find her on Twitter at @LizzieWeakley and on Facebook at facebook.com/lizzie.weakley.