Bankruptcy is a word that is dreaded by every business owner. This is probably with good reason, as although rates of insolvency are decreasing, they still remain quite high. Most ventures do not make it past the first several years.
What most people do not know, however, is that bankruptcy is not a death sentence. No, it is not the most desired position, but it is possible to get back on track once you had filed for it. Here is what you should know and consider doing if you are planning on getting your company up and running coming out of bankruptcy:
The Type of Bankruptcy Matters
The three most common types of bankruptcy filed are Chapter 7, Chapter 13, and Chapter 11. Prior to deciding which one you would like to proceed with, it is important to understand the consequences. The first thing you should do is get business bankruptcy help. This is so that you will have a clear picture of what exactly will happen to your company when you file for bankruptcy.
For instance, with Chapter 7, your entire company is dissolved and sold to pay off the debts you have accrued. With Chapter 13, the debt is simply rearranged, but this may affect your organization to an extent as well. With Chapter 11, however, your company will remain up and running throughout the duration of the filing.
Learn from Your Mistakes
The one good thing about failure is that it allows you to learn from your mistakes. You should take full advantage of this opportunity. Take a look at why your previous venture did not work out. What did you do wrong and what can you do in the future to avoid such a mistake? It is important that you take a close look at your past operations and figure out what was holding your company down.
Then, come up with a viable way to make sure that this does not continue to be a problem in the future. You can also use your past experience to come up with an even better business plan for your new venture.
Regain Your Credit Score
The bad news about filing for insolvency is that your credit score takes a considerable hit. This, in turn, makes it difficult for you to get access to the funds that you will require for your new company. In fact, it has been shown that business owners who have filed for bankruptcy are about twelve times less likely to have a loan approved.
While this can be disheartening, it does not mean that the situation has to remain like this. What you will need to do is to begin rebuilding your credit score. It may take a while, but every little effort counts. For example, something as simple as paying all of your bills or making credit card payments on time can greatly help you.
Get the Funding You Need
While you are building up your credit score, however, you are still going to require funding. Since it will be difficult to get funding by yourself, you are going to require help from someone else. One of the things that you can do is to find a partner that has a good credit score. You can use this to get the loans that you need.
Another venue that is open to you is one where you do not rely on more traditional financial institutions such as banks. You can choose to have an angel investor instead.
These are a few of the ways that you can bounce back after insolvency. While it may seem like a difficult situation, you have plenty of opportunities to succeed the second time around.
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