10. Pretending
Nothing's Wrong. Although
optimism can be a wonderful trait,
refusing to face up to financial challenges
when your business is in trouble will
do more harm than good.
9. Keeping
the Fat. It's essential to
look at expenses with a ruthless (and
unselfish) eye when bankruptcy looms.
That may mean giving up your prime
parking spot, flying coach, or even
laying off the brother-in-law that
you hired as a favor to your little
sister.
8. Keeping
Your Employees in the Dark.
Although you don't have to divulge
every financial detail, it's best to
be straightforward when it comes to
communicating with your employees.
If they understand the full picture,
they may be willing to accept short-term
pay cuts or reductions in hours in
the interest of long-term security.
7. Deceiving
Your Creditors. If you're
honest with your creditors, they may
be willing to cut you some slack in
order to maintain your business relationship.
In addition, if you do end up filing
bankruptcy, your fraud may come back
to haunt you: in some cases, money
obtained by fraudulent means must be
repaid even if bankruptcy is filed.
6. Laying
Off Critical Personnel. Although
it may seem like a good money-saving
strategy to let go of highly paid workers,
there's no way your business can pull
itself up by its bootstraps without
your best people.
5. Pledging
Personal Property as Collateral.
When there are no longer business assets
that can serve as collateral for loans
to keep your business afloat, it may
be tempting to pledge your house, but
if things don't improve, you could
then stand to lose not only your business
but your family's home, too.
4. Dipping
Into the Wrong Cookie Jar.
It can also be tempting to dip into
any ready source of cash in a crisis,
but such impulses should be tempered.
Some cash-starved businesspersons have
been known to borrow from resources
like payroll tax reserves with the
intention of catching back up later
and paying them back, but if that becomes
impossible, the interest and IRS penalties,
to say nothing of potential officer
liability, will be worse than getting
your fingers slapped by Mom.
3. Letting
Your Reserves Dwindle Down to Nothing.
You should always have some cash on
hand. Even if you do end up filing
bankruptcy, you stand a much better
chance of successfully reorganizing
and making a go of it post-bankruptcy
if you have some reserves.
2. Being
Disgraced by a Bankruptcy.
Although going bankrupt should not
be high on anyone's to-do list, it
is important to remember that filing
bankruptcy is a respectable option
when all other efforts to revive a
business in financial crisis fail.
Bankruptcy is a constitutionally provided
vehicle to a fresh start, not a shameful
disgrace.
1. Going
It Alone. In times of crisis,
you need the strongest and smartest
allies you can find. Your business
or bankruptcy attorney can advise you
on the most prudent courses of action
to preserve your business and personal
assets and protect your long-term financial
interests. Even when money is tight-especially
when money is tight-the counsel and
support of an experienced lawyer are
worth every penny.
Disclaimer
This publication
and the information included in it are
not intended to serve as a substitute
for consultation with an attorney. Specific
legal issues, concerns and conditions
always require the advice of appropriate
legal professionals.
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