Don’t Keep Digging If You Are In A Hole!
2020 (and continuing into 2021) has been challenging for small businesses. Once profitable businesses have been losing money and debt has accumulated with owners finding themselves in the hole.
Rather than just keep digging to get out of the hole, it is important to really evaluate your options. Doing this sooner will improve your ultimate outcome! I cannot stress this enough.
FinAdvisr.com recommends doing the following steps:
Complete the 13 Week Cash Flow to better understand your inflows and outflows, and identify if there is additional financing needed to fund the business. You may or may not want / be able to self-fund any shortfalls. It is important to know this when dealing with your banker.
Complete the Liquidation Analysis. This will help you understand if a sale or liquidation of the business will pay back the bank, and leave money for creditors and owners. If there is a shortfall with the bank, it can provide leverage in negotiations as bankers want to cut off losses and move on oftentimes.
Complete the Financial Assessment. This self-questionnaire will help identify issues as you work through the challenging times.
There are options available (i.e. bankruptcy, selling the business, Article 9 sale, raising money, refinancing the debt). Experienced professionals who have done this before are the best guides in navigating the process.
