Do we have to prevent being broke?
If you seek the life of successful people, you see they have one thing in common: They all have been broke once.
Being broke happens in small businesses too. but the most important questions are: What is bankruptcy? When do we become broke? How to prevent it from happening? And finally, how to face it when we are being broke?
What does bankruptcy mean?
Simply said, when a business (small or big) can’t afford to pay its debts, we say they are being broke.
Only the court can file a bankruptcy otherwise we can’t use it to define the company’s situation.
Being broke can question the credibility of a company so we have to learn how to replace it.
What causes being broke?
Truth be told, small businesses are being broke more than other companies because of limitations and being inexperienced. Learn about the causes of bankruptcy so you can prevent it from happening:
1- Lack of investment
You need to have enough money to invest before starting a business. The invested money must be calculated and predicted. Lack of investment can be harmful to the business.
2- Lack of cash flow
At the beginning when you start a business, the costs are too much, even might be more than the income. So when you are not prepared to deal with this situation, you will become broke soon enough.
3- Weak and inflexible plans
Weak plan means the plan which won’t predict what will happen in the future.
Bankruptcy and lack of cash flow is the result of inflexible and weak planning.
A cohesive schedule that includes all predictions and plans is suitable for a successful business.
4- Not being ready to compete
If you want to prevent being broke, try to keep up with the competitors or even get ahead of them.
To gain credibility in your business, you need to prepare and present something different.
Make a difference or present the same idea as your competitors but in a valuable and more different way. Then your business will become successful.
5- Weak marketing causes being broke
Make a powerful strategy for marketing before you enter this area of expertise. Try to develop your business step by step with wise decisions and lower risks.
The satisfaction of your customers shows the quality of your marketing and strategies.
Replacement for the time you are close to being broke
All of these solutions require self-confidence and courage.
Solution for being broke
1- Sell your properties
This solution is a fast way to prevent bankruptcy and it might seem too much. It is not necessarily the best way but if you think keeping your credibility that you have worked on for many years is more important and valuable, you need to go for it.
Try to sell the properties that you won’t be needing them such as jewelry, extra furniture, electrical stuff like DVD, PS, etc.
You can sell them on a website such as eBay.
2- Stop spending money for a while
If you look at your costs, you may understand that you can save some of your money until you pay the debts. Also, you can work for extra hours, or doing some part-time jobs to prevent bankruptcy.
3- Ask others for help to solve being broke
It is a good idea to ask the clients to give you more time for paying their debts. You can also suggest to pay them back partially, a little bit of the debt each month. If the clients don’t agree, you can ask for a loan with the help of your friends and relationships.
Be careful to check the lending rate. If it’s too much, you will be more in trouble.
4- Hire a consultant
You may say how to hire a consultant with no money? But you need to know that some people have the exact job. They are experienced in dealing with creditors and they can help you with their expertise.
So trust them.
5- Ask for your friends and family’s help
You can borrow money from your friends and families. But each rule has its exceptions.
Take your time and calculate the amount of money you need to prevent being broke. Consider the fact that how much you can borrow from your friends and family.
Before asking them for money, show them you plan in which how your situation is and how much it will change if they help you. explain to them how you will pay them back. This way you can gain their trust.
6- Postpone the current debts
It’s better if you concentrate on the debts you haven’t paid for a long time.
Considering your situation, the current debts shouldn’t be your concern.
Also, don’t use some company money that wants a triple time payback because it will cause you more trouble.
7- Make a combined solution to prevent being broke
Instead of reading all these options, consider them as your tools which you can use each of them at the time of being broke.
For example, you can make a combination of them:
Sell some of your properties, reduce your costs, negotiate with your creditors and borrow money from your family and friends.