If you want to stay financially healthy, then it is so important that you take steps to avoid going bankrupt. If you follow these 5 recommendations, then you will soon find that it is easier than ever for you to make the right changes, and make a positive step moving forward.
By Team Savant
Image: Lance Reis
Pay Your Bills On Time
If you want to stay financially healthy then the first thing you need to do is try and build a solid cash reserve. You need to update your business plan, and you also need to look at diversifying your streams of revenue. This will allow you to pay all of your bills on time, which will help you to stay afloat much easier. If you aren’t making your payments on time or if you are straining your relationships when you just don’t need to then this can result in you being in more debt than you should be. It may get to the point where your suppliers end up taking you to court, which is the last thing you need. Your credit score will suffer quite a lot if this happens, and this will impact you even more later down the line.
If you happen to foresee any issues with fulfilling your payments then at least make sure that you are telling your suppliers about this. At the end of the day, it is in their best interests to try and help you so they can guarantee that your business is safe in the future. As a business owner, you also have to try and keep accurate financial records. If you can do this then you will soon find that you can keep track of what you have coming in and what you have going out.
Pay Your Taxes
The last thing you want on your credit report is some kind of tax lien. If you are behind on your taxes and credit vendors see this then you may find that they assume you cannot pay for their services either and this is the last thing you need. If you want to work around this then you need to make sure that you are keeping up with tax credits and that you are also avoiding any tax mishaps. If you do get a tax mishap then this won’t result in the end of your business, but at the same time, it is best if you can avoid it. Start by taking the time to study where you stand and assess what you can do to improve your situation from there.
Learn To Use Credit Reports
Credit reports, whether they are yours or that of your customers, are so important when it comes to your business success. You need to start by studying your own, and you also need to make sure that you take note of where you stand. You also need to make sure that you use them when effectively onboarding new customers. If you know that a customer credit report is raising a lot of red flags then take steps to actively deal with this. You may even want to avoid doing business with them so you can avoid putting your business in a bad position. Of course, if you have had this happen quite a lot then you may be in the position where you are actively facing bankruptcy, and in situations like this, you may find that you have to take any business you can get. In situations like this, you need to take steps to hire a good lawyer. When you do, they can then tell you what steps you can take to not only get out of your situation but to also make sure that you don’t end up in it again, especially if you have clients who have breached their contract.
Build Good Relationships
Another thing you need to do is try and build a good relationship. When you run a business, it is so important that you take steps to cultivate relationships. This can be hard when you run a B2B enterprise but with that said, it is a big factor when it comes to your business. If you want to help yourself here then you need to know your suppliers, and you also need to make sure that you understand this and that you take steps to avoid it. If you can, you also need to take the time to get to know your suppliers. Knowing your suppliers, their supply, the habits that they have and more can go a long way when it comes to overcoming issues. If you can, you also need to make sure that you are trying to understand the point of contact for each business. Being able to send an email or even make a phone call to clear something up will help you a lot. It will also help you to gain a much better understanding of things and how it all works.
If you know that things are becoming problematic, then a relationship can help to make those conversations a little easier. It can also help you to create a bit of a plan of action when it comes to moving forward as well which is always a good thing. This is especially the case if you are trying to minimize the impact caused by bankruptcy.
Know the Signs
Another thing you need to do is take the time to learn the signs of going bankrupt, so you can avoid them. Changes in payment behavior are a major red flag, and so are looming cash flow issues. Tax liens are another thing to watch out for, as are court judgments. If your business is experiencing things like this then seeking the right support is so important. If you don’t then you may find that you end up putting your business at risk, which is the last thing you need. If you can avoid all of this then you will soon find that it is easier for you to get on track once more.