Dealing with financial hardships as an entrepreneur is not uncommon. In some cases, you may even find yourself pondering the prospect of filing for bankruptcy. However, it’s important to know how to protect your business in order to prevent losing your entire investment and venture. Knowing what steps to take in order to protect your business from bankruptcy is key to ensuring the ability to maintain operations even when times get tough.
Finances Required to Run a Business
When it comes to operating a business, becoming financially literate is essential. Understanding what finances are required to run any type of business is imperative in order to achieve long-term success. Whether you’re operating a small local business or an online business that operates internationally, you will need to know just what type of financial commitment is necessary to launch and operate your business at all times. Building a business from the ground up often requires the following:
- Personal investments: You may need to invest some of your own personal money to get your business started. This is ideal for those who do not qualify for any other forms of loans, including business loans. In addition to personal investments, many entrepreneurs also turn to family and friends to seek out additional investments when attempting to build a business without the aid of a traditional loan solution.
- Obtain a business loan: Applying for business or commercial real estate loans is also possible for qualifying individuals, depending on the type of venture you’re interested in pursuing.
- Angel investors: Depending on the industry you are working in, it may be possible to seek out an angel investor. Angel investors provide lump sums or rounds of funding for various types of businesses, often in exchange for a percentage of control of a company or entity.
- Subsidies and grants: In some cases, it may be possible for a business to receive grants or subsidies from various organizations or even the government, depending on qualifications.
Obtaining Loans for Your Business Matters
At times, as an entrepreneur or business owner, you may need to apply for loans. This may be due to a potential bankruptcy issue or for other financial reasons. Regardless of the reason why you need a loan for business matters, there are a few ways to prepare for the process.
Create a Solid Business Plan
Having a solid business plan in place is not only key if you are seeking out angel investors, but it can also come in handy when applying for traditional business loans. Depending on the loan office or office you approach, a solid business plan can have a significant impact on the outcome of your application.
Work to Improve Your Personal Credit Score
Even if you are applying for a loan for your business, it’s important to pay attention to your own personal credit score. Applying for any type of loan will typically require an in-depth review of your own credit score, assets, and current income. Any time you are applying for a loan via the SBA, or the Small Business Association in America, your personal credit will be reviewed.
Improve Your Debt-to-Income Ratio
Another way to increase your chances of approval when applying for a business loan is to improve your own personal debt-to-income ratio. Reducing your overall debt-to-income ratio will help you to appeal to more lenders than if your ratio is higher than average. If your debt-to-income ratio is higher than the average applicant, a lender is more likely to deny your loan application.
Maintain a Steady Bank Balance
Anytime you are applying for a bank loan or a loan for your business, it’s important to keep your personal and business bank accounts flush with cash. Maintaining a steady bank balance without disruptions or overdrafts can help improve your chances of approval when applying for any type of loan, big or small. Having adequate cash on hand will also indicate to lenders that you are capable of making loan payments on time, which may also influence their decision when it comes to your business loan.
Boost Income and Sales Before Applying
Even if you are struggling with the prospect of bankruptcy, it’s important to attempt to boost income and generate sales for your business before applying for any financial assistance or loan. Spend time boosting sales with the right marketing strategy to effectively appeal to potential lenders, which can ultimately help you avoid bankruptcy in a time of need.
The Importance of Business Insurance
When you want to protect your business at all times, you will need to ensure you have the right business insurance. If you’re unsure of the type of business insurance you require, turn to professional business loan services in your location. Business loan service professionals will provide you with the right type of insurance that you need for your business based on the type of goods, products, or services you offer.
Additionally, working with professionals who specialize in business loan services can also help you to better understand the level of coverage you require based on your company’s current location. Business insurance is an integral factor to keep in mind if you want to protect your business from bankruptcy disasters or from losing your investment altogether. It’s important not to underestimate the importance of business insurance.
Having the right business insurance can help with the following:
- Property damage and theft: If you experience property damage in your place of business or even theft (regardless of the culprit), you will be financially covered with the proper insurance.
- Liability: Whether a customer, employee, or contractor is injured or experiences an accident on your company’s property, you will be protected with the right liability insurance for your business.
- Workers’ compensation: When a worker is sick or hurt, they may file for workers’ compensation. Having the right insurance will protect you and your workers when they need assistance the most.
- Business income: Business income insurance can also come in handy whenever you are faced with financial woes, such as the potential of having to file for bankruptcy. Speak with a professional who specializes in business insurance to determine the type of insurance you require for maximum protection when it comes to financial matters.
Finding Legal Representation for Bankruptcy
When it comes to ensuring you can protect your business, you will need to find the proper legal representation. The right bankruptcy attorney is essential whenever you are facing financial struggles and the possibility of bankruptcy as a business owner. If you are thinking of hiring an attorney to assist you with the prospect of bankruptcy in your own business, look for the following:
- Experience: Seek out an attorney who is not only licensed to represent business matters, but one who has experience with bankruptcy firsthand. Bankruptcy lawyers understand the ins and outs of filing for Chapter 7 and Chapter 13 bankruptcy and can help walk you through the steps involved in each.
- Track record: Find a lawyer who is not only experienced at working with bankruptcy cases, but one that has the track record to prove it. Request information on previous clients and cases to learn more about the level of experience the attorneys you are thinking of hiring have under their belts.
- Referrals and recommendations: Whenever you are thinking of hiring legal counsel, request referrals and recommendations from those you know and trust. Recommendations can go a long way, especially when it comes to hiring legal counsel for serious matters, such as ones involving bankruptcy.
In other scenarios that do not involve bankruptcy, you may also need to seek out proper legal representation. If you are dealing with a lawsuit involving a product you have manufactured or sold, hiring a product liability attorney is key. When approached with a lawsuit involving a workplace injury and an employee, retaining a workplace injury lawyer is imperative. Finding the right legal representation is key to ensuring you are on the right path at all times as a business owner, investor, or entrepreneur.
Marketing Your Company Properly
If you are in the process of attempting to rebuild your business, garner clients, and generate sales, you will need to do so with a proper marketing strategy in place. Marketing is an integral part of any business and brand today, whether you are running an online business or a local company. When it comes to marketing your company properly, there are a few important elements that should be kept in mind, such as:
- Audience: Consider the target audience you intend to reach with your marketing strategy. This will help you to determine which marketing methods are ideal for your budget and any timeframe you have set for your bankruptcy case.
- Budget: Calculate the budget you have for the marketing campaign you have in mind. Consider the duration of the campaign and whether you will be using local banner printing or opting for digital marketing strategies instead.
- Marketing methods: Research popular marketing methods that are ideal for your business and brand. From traditional banners to cloud solutions such as third-party advertising can help you reach your intended audience. Consider using paid advertising, guest blogging, link-swapping, social media, and even print ads depending on who you intend to reach and when.
Developing your brand is also key for any business, even one that is struggling financially. As you work towards generating sales and garnering clients, it’s important to solidify your brand’s image in the marketplace. This can also help to increase your chances of being approved for any business loan you apply for when you need it most.
Paying for Commercial Real Estate
If you want to protect your business from bankruptcy, you will need to know how to go about paying for commercial real estate before diving into entrepreneurship. Typically, paying for commercial real estate is done with personal investments, traditional loans, lines of credit, and in some cases, even angel investors. If your business entity qualifies, you may also be able to apply for government subsidies or grants, depending on your business model and its purpose.
Once you qualify for a loan, you can then begin to work with commercial general contractors who specialize in commercial real estate. Working with general contractors who specialize in commercial real estate is highly recommended if you are interested in investing in an empty lot and constructing a business from scratch.
General Business Management Finance Tips
Anyone who is the owner of a company will want to protect your business at all times. Understanding the basics of business management and business finance is essential in order to streamline operations while minimizing risk in any industry today.
Setting Up the Right Type of Business
Those who have an interest in working in business as an entrepreneur should familiarize themselves with the different types of businesses that they can form. Forming the right business is essential to maximize protection and minimize liability and risk. In order to avoid personal liability, you will need to choose from forming an LLC, a Limited Liability Corporation, an S-Corp, or a C-Corp. These are the most common types of business entities that are formed and registered today.
Separate Your Personal and Business Finances
Along the same lines as registering a business entity, it’s also advisable to keep your personal and business finances separate at all times. This is optimal for tax purposes and business management solutions. Use separate checking and business accounts along with separate credit cards whenever you are making a purchase for your business, as opposed to shopping for personal goods.
Finding the Right Legal Representation
When you find yourself facing financial loss and the possibility of filing for bankruptcy, finding the right representation is a time-sensitive matter. Working together with a bankruptcy law firm is one of the fastest ways to find the best course of action to take regarding your business and the financial decisions you are making. Bankruptcy attorneys who specialize in filing bankruptcy on behalf of businesses can also provide you with step-by-step guidance that will protect your assets as best as possible.
Whether you’re attempting to protect your business from your first bankruptcy or if you’re trying to mitigate financial hardships you’re already dealing with, there are plenty of options. Knowing the resources you have available to help protect your business can help guide you along the right path while allowing you to preserve your peace of mind.