As a business owner, you work tirelessly to make sure that your business is successful. Sometimes, though, things happen, and it becomes clear that your business is failing. Unfortunately, it’s not always easy to figure out what the best thing to do at this point would be. This blog post will explore your options when a business has failed and help you decide how to move forward with confidence.
Whatever you do, act before it is too late so that you don’t need to start exploring options around disqualification.
When a business fails, it is common for people to think that they need to declare bankruptcy. However, an alternative option would be going into insolvency instead. This means you will negotiate with your creditors and work out how much each person can get back when the assets are divided up between them.
This is different from bankruptcy because, in this case, there may still be something left of value when everything has been split up between the creditors after all debts have been paid off. If you feel like this might be right for you, we recommend talking to someone who understands these things about what options best fit your situation (e.g., tax consultants). But, again, the earlier in the failure process you make this decision, the more likely you are to be able to find a resolution.
#2 Sell the business
One option you could consider is selling the business to another party. This may be someone who will take over your business, or it might just be someone looking for a company that they can purchase at an attractive price so that they can liquidate its assets and sell them for their own use.
If this seems like something you would consider, we recommend finding out the current market value of your business before taking any further steps required to make this happen. You want to make sure that if anyone wants to buy your business, it’s not only going to pay off all debts but also leave enough money left over for you after everything has been sold off (e.g., equipment).
#3 Alternative finance
Another option you could consider is alternative finance. This means finding ways to pay off your debts with the help of someone else who wants a share in what you are offering (e.g., equity or debt).
This can seem like it will only work for certain types of businesses, but there are actually many options out there that might be right for yours! For example, if you’re running an online business, sites such as Kickstarter and Patreon offer people funding to support something they find valuable. If not them, perhaps you know somebody whose financial situation would mean this is an attractive investment opportunity?
#4 Company Voluntary Arrangement (CVA)
This is another option you could consider if everything else seems to like it will not work. Finally, a company voluntary arrangement (CVA) is a legal agreement that allows your business to pay its debts over time, ideally in an amount and manner that works for everyone involved.
As with alternative finance, this might only be something certain types of businesses can do, but there are many out there who have managed to make this happen successfully! If any of these options sound interesting, it would be highly recommended to talk to a tax consultant or other professional about the next steps towards making them into reality.
Image Credits: Tara Winstead