My Company is in Trouble: What do I do?

Is your Company in trouble?

Is your Company in trouble?

Every business entity is different. Signs of financial distress of one company may not apply to another. Notwithstanding, common problems most companies experience tend to be warning signs, signals, of pending trouble regardless of type of business, industry, size, etc.

Your company may be experiencing these types of symptoms:

  • Revenues experiencing a decline over several quarters or not meeting budgetary levels. Or your cash position is getting low as your product or service sales fallen off. You are constantly keeping an eye on the business cash cycle trying to avoid an imbalance of cash in take to cash outflows.
  • The business has lost one of more key customers and the indication of replacing the lost income is not looking promising.
  • The business is struggling to meet payroll.
  • Secured creditors are requesting for more collateral.
  • Creditors as well as suppliers have restricted lending the business as the business working capital gotten tight.
  • Key employees and managers have quit
  • The bank has threatened to call the loan.

It is normal human nature to avoid difficult problems and put off dealing with the issue. Hence, you may minimize the business problems or assume that time is on your side and it will go away. It will not!

Reality is here. As a manager or entrepreneur you must avoid being in a “state of denial”. These problems will not go away. When the business is heading downhill, you must decide whether or not you want to remain in business. This is an important issue to must not be put off.

Spend some time thinking about what you are going to do. It is critical that you think with your head and not with your emotions. Put aside your ego, sentiments, and pride. Think of what is best for you and your family. Family will be affected by your decision. Consider the following:

  • How difficult will it be to raise fresh money that you will need to turn around the business? The money to pay the bills and the money needed to execute your plan.
  • Question yourself do you have what it takes to save the business? For a small company, running it is hard enough. As the side time, the turn around process will be a monumental challenge. So do you opt for:
  1. Institute a turn around by either hiring a turn around specialist or lead the restructuring by yourself
  2. File for chapter 11 reorganization possibly losing control of the business
  3. File for chapter 7 liquidation
  4. Ramp down the business by sun setting the company in an orderly shutdown.
  5. Sell all or part of the business

Do not underestimate the time, effort, and commitment required of any choice. Not to mention the amount of money it will take to meet the challenge.

If you decide that you want to save the business, know that the potential benefits outweigh the sacrifices you and your family will have to make. So think clearly about the options.

Gary Rushin, CPA/CIRA (GaryRushin.com)

Gary Rushin, a licensed Certified Public Accountant and is a Certified Insolvency and Restructuring Advisor mentors entrepreneurs and business executives on business strategy and corporate renewal. Gary Rushin taught executive level business students in the U.S., India, and China and has advised donor agencies and a central bank on prudential underwriting and supervision.

For free online accounting mini course “http://AccountingMiniCourse.com” designed for entrepreneurs go tohttp://AccountingMiniCourse.com

 

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