Business failure: 5 signs to watch out for
Despite the fact that business failure is very common in QuebecWhen it's time to think about it, there's always a taboo. personal bankruptcy. A certain fear and sense of failure can sometimes be associated with such a term.
However, on certain occasions, the best solution to undertake when you are no longer able to continue your activities, and financial obligations.
In this article, the team of financial turnaround N. Séguin inc. exposes you 5 signs that should make you think about the commercial bankruptcy.
From loss-making results to business failure
Repeated losses at your company should make you think about bankruptcy as a potential solution. A company's profit or loss can be determined by adding together three types of income and expenses:
- Operating income
- Net financial income
- Net exceptional income
In the event of a deficit, your company's net income will be less than zero. If you can't generate enough profit to reduce these losses, you need to act fast.
Drowning in debt
Is your company's inability to repay its debts considerably slowing down your business? You postpone payments to your suppliers on a daily basis, because you can't afford them? Not sure whether you should pay your suppliers or your employees?
Your company's insurmountable debt can be explained by spending too much for too little or too slow a return on investment.
If your company's indebtedness is constantly leading you to make difficult decisions, choosing to file for bankruptcy may offer you a second chance.
By going bankrupt, your debts are wiped out. So you can start from scratch.
The loss of an important customer and the snowball effect.
If your company's prosperity depends on a small number of customers, or a few major ones, bankruptcy risks are considerably increased. An undiversified business or customer base is all too often a catalyst for business failure. When a key customer leaves, the consequences tend to follow in a kind of snowball effect.
This hard blow can be an opportunity for introspection as to why this important customer has decided to stop doing business with your company. You can use this defeat to further improve things that aren't working so well. and better satisfy your future customers.
When bankruptcy is your only protection against your creditors.
Business bankruptcy is a solution to the relentless pressure from your customers. creditors. Being insolvent can act as protection. Indeed, when you declare bankruptcy, creditors no longer have any claim on your company. They can no longer order you to liquidate your assets, stock or even garnish your wages.
In other words, when a company goes bankrupt, you free yourself from your creditors.
If you are subject to legal action...
If your business is subject to legal action by your creditors and you are unable to repay your debts, a bankruptcy trustee as N. Séguin inc. remains the only legal ally available to get you out of such a legal process. Séguin inc. is licensed and experienced in the administration of bankruptcy proceedings. A trustee also ensures communication and can propose agreements with your creditors.
Declare bankruptcy and team up with a trustee in bankruptcy can relieve you of a great deal of stress in addition to facilitating communications with your creditors.
One thing is certain: in the event of business failure, it's vital to act quickly and surround yourself with a team that can guide you towards a brighter future.
Benefit from free consultation with one of our turnaround advisors which will tell you what to do in the event of a company bankruptcy.
