Starting a business is not for the faint of heart. A certain level of stress comes with carrying the responsibility of ensuring your company\u2019s success. If things go wrong, it all falls back on you. That said, the freedom and sense of accomplishment of running your own business make the challenges well worth it.<\/p>\n
With good planning and strong business practices, you can avoid the pitfalls and drive your business to financial success. Learn the top reasons why small businesses end up in bankruptcy and what you can do to prevent that from happening to you.<\/p>\n
Not bringing enough money in is the main reason why businesses fail. You simply must have more money coming in than is going out, or you\u2019re on the express train to bankruptcy. This might mean increasing your prices or decreasing your costs, or a combination of the two. There might also be different service models you can offer (such as subscription services) or ways to branch out your income.<\/p>\n
Work with an accountant or bookkeeper to help you identify issues with your cash flow as soon as you know there\u2019s a problem\u2013or to prevent one before it happens. The earlier you catch a cash flow problem, the better.<\/p>\n
Don\u2019t rely solely on credit to fund your business. If you start in a deficit, climbing out of debt and becoming cash positive will be much harder. It can also be challenging to break the habit of throwing capital investments on credit in an attempt to start making money.<\/p>\n
Explore all of your options for initial funding. Make sure you have more than enough funding to start your business off on the right foot.<\/p>\n
Economic recessions or depressions can negatively affect businesses, especially those relying heavily on consumer spending. Unfortunately, there\u2019s not much anyone can do about a poor economic climate but try to budget for the ebbs and flows of the market so you have breathing room if times get tough.<\/p>\n
An emergency account with money set aside for unexpected situations will at least give you some cash to survive on if things take a downturn.<\/p>\n
Finances can get complicated, which is why you need to make sure you\u2019re on top of things. Failing to keep accurate financial records, not managing expenses effectively, and not correctly forecasting future revenues and costs are all issues that could hurt you financially.<\/p>\n
Work with an accountant, bookkeeper or advisor if you\u2019re having difficulty managing your finances. They can help you set a plan and show you how to ensure your money is best used.<\/p>\n
If you can\u2019t compete with your rivals, your business may struggle to generate enough revenue to stay afloat. This problem typically comes back to a lack of market research.<\/p>\n
An entrepreneur jumps into a market they\u2019re passionate about, only to discover that somebody else is already offering the same thing \u2013 and they\u2019ve already got the market cornered. Or maybe there\u2019s no need for that particular product or service at all.<\/p>\n
Do your market research before going into business, and before offering a new product or service. The results will tell you whether there\u2019s a need for what you\u2019re offering.<\/p>\n
Lawsuits, fines, and penalties can be costly for businesses, draining their financial resources. The best way to avoid this is to ensure you\u2019re familiar with the rules and regulations you must follow or get help from a professional advisor when necessary. An ounce of prevention is worth a pound of cure.<\/p>\n
While the reasons businesses end up going bankrupt may seem numerous, there are some specific things you can do to make sure it doesn\u2019t happen to you, such as:<\/p>\n
By taking these steps, you can reduce the risk of bankruptcy and increase the chances of long-term success.<\/p>\n
A business might end up in bankruptcy for many reasons, but a bit of planning goes a long way. Do your research, be honest when you need help, and work with a financial professional to help you stay profitable. [Contact us] to further discuss how you can protect your business and learn how we can help.<\/p>\n","protected":false},"excerpt":{"rendered":"