Insolvency – Avoiding Small Business Bankruptcy
Avoiding small business insolvency or small business bankruptcy in the United States is becoming increasingly more difficult. With an average of 85% of businesses closing within the first year of opening, considering going into business for yourself can be discouraging to say the least. However, arming yourself with information and knowing what steps to take can improve your chances for avoiding insolvency.
Ideal Trading is in the business of helping small businesses liquidate their excess inventory post bankruptcy. However, we know that small businesses are the lifeblood of our American economy. Over the past 15 years small businesses have generated over 60% of new jobs growth alone. Small businesses need to thrive for any of us to thrive so we’re here to help arm you with the knowledge you need to succeed as a small business owner.
Here are a few basic things to avoid to decrease risk for small business insolvency:
1. Lack of experience – This may sound obvious but it is the most important in the list of causes for small business failure because it can ultimately be responsible for all of the other reasons for insolvency.
2. Bad location – Lack of experience may lead a small business owner to choose a location that is not ideal for the goods or services they are selling. Poor location selection can also increase the risk for small business competition. Having a well established small business competitor nearby can increase chances for small business insolvency.
3. Unnecessary use of business funds – Some small business owners fall into the trap of dipping into their business funds for personal use. This should be avoided at all cost to reduce risk for small business insolvency. Business funds should only ever be used for legitimate business expenses.
4. Poor management of growth – Growth of a small business is a great thing! However, rapid growth can lead to mismanagement of funds and resources if the business is not prepared. Insolvency comes from not planning ahead for growth. Basic planning can help a small business to be prepared for the day when they need to expand.
For information on steps to take as a small business owner after an event like Hurricane Sandy visit our blog here. Or to learn more about the services Ideal Trading has to offer before or after small business insolvency including appraisals and auctioning visit us here.