In our years in practice, we’ve worked with many businesses and business owners who chose a bankruptcy filing to either wind down or restructure a business. In many instances, the factors that led to the bankruptcy were beyond their control—accident or illness, changes in laws affecting their business, or just bad luck. But far too often, we’ve seen business owners engage in actions that contributed directly to the failure of their business enterprise. In this series, we’ve looked at some of the most common “strategies” to avoid, if you want to stay in business.
Strategy #5—Consider Whatever Is In Your Checkbook to Be Yours
Far too many business owners operate under this assumption—once I’ve collected on my accounts and paid my bills, whatever is left over is my income. There’s a better approach. Keep money in the business to cover reasonable eventualities and pay yourself a realistic salary, just as you would pay any other employees. Try to keep cash reserves, for the inevitable unexpected challenges, eg a slow-paying or non-paying customer.
Strategy #6—Just Do What You Do and Do It Well
On its face, this seems like a good approach—focus your energy on being the best you can be. But you need to know your market and your customers. You can’t ignore the marketplace and you can’t ignore what your competitors are doing. If you do, you may find the market has changed and you are too far behind your competitors to catch up. If you don’t keep an eye on what your customers want and what they will buy, plus what other market players are doing, you can quickly lose any competitive advantage.
Strategy #7—Commingle Business and Personal Matters
Often, business owners will spend significant time and expense to create a limited liability company or a corporation, so that their potential financial responsibility for the debts of a business can be controlled or reduced. Unfortunately, they will then turn around and operate the business like it’s a sole proprietorship, failing to properly document payments from the business or taking other action that ignores the legal structure. If the business fails and it appears that the limited liability or corporate status was a sham, you can be liable personally for the obligations of the company.
Contact Neuner & Ventura, LLP
At Neuner & Ventura, LLP, weprovide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.
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