Small businesses going bankrupt is more common than you might think. Between 2013 and 2017 alone, more than 26,000 businesses declared bankruptcy each year.
If you’re one of them, you know that recovering after a bankrupt business isn’t as simple as you might think, especially if you want to start a new company. That doesn’t mean it’s impossible.
You need to know how to recover quickly so you can get your business up and running fast. Here are a few simple tips to help you do just that.
1. Look at What Caused Your Bankrupt Business
Before you can start trying to bounce back if your business goes bankrupt, you’ll need to figure out what led you to bankruptcy in the first place. Take a long, hard look at your business’s processes, the debts you carried, and your operation strategy.
Was there something you struggled with? Did you get in over your head with debt? Were your product offerings not strong enough to drive consistent sales?
Whatever the reason, make sure you understand why you went into bankruptcy in the first place. Once you can identify the cause, you can start making the necessary changes to avoid that situation with your future business.
2. Understand and Improve Your Credit Score
Businesses going bankrupt can count on one thing: a bankruptcy will hurt their credit score. When it does, you’ll need to improve your score before you can start to work with lenders like you used to.
The best way to do that is to review your credit report closely. Look for any errors that might impact your score and report them as soon as you notice them. If you still have outstanding personal debts, start paying them off as quickly as you can.
Your personal credit score can help you get funding when you start your new business.
3. Look at Ways to Get Capital
New businesses and those with bad credit after a bankruptcy can find it hard to get financing, especially right in the beginning. So, think outside of the box and find ways to get capital that don’t force you to rely on traditional lenders.
Consider partnering with investors who believe in your mission and your services. Try applying for DIP financing and partner with a lender that wants to help you get back on your feet. Or bootstrap the entire operation and avoid taking on too much debt in the beginning.
Whatever you choose, it’s up to you. Just make sure the type of financing you accept is something you can repay comfortably.
Recovering From a Bankrupt Business Is Possible
Recovering from a bankrupt business takes hard work and dedication. But it is possible as long as you’re willing to put in the effort.
Keep these tips in mind and you’ll be on the right track to get your new company off the ground fast. And you’ll be able to do it without falling back into the same habits that led to bankruptcy in the first place.
Looking for more tips to help you keep your business running in the black? Check out our latest posts.
