Sinking Ship: Saving Your Family’s Finances When Your Small Business Fails

Starting your own business is an exciting and challenging experience. It gives you the opportunity to set your own schedule, to be your own boss and control your own life. Unfortunately, it also presents some unique challenges and pitfalls if your business fails. One of these pitfalls is that the finances of yourself and your family could be ruined if your company does not turn a profit. What can you do to stop your financial ship from sinking completely?

Sell Business Assets Or Use Them As Collateral For Loans

If you reach the point that your business is going to hurt your family’s finances, you need to prepared to  take some drastic steps to protect what’s most important. Your first action should be to sell off any business assets that can raise money for your business and keep your personal finances afloat. If your company owns land or has heavy equipment, that can be used as collateral for business loans, those loans can be used to clean up your balance sheet enough to find a buyer or possibly turn your company around. Most businesses go bankrupt because they mismanaged their cash flows, not because it was necessarily a bad idea.

File For Bankruptcy

The next remedy is to file for bankruptcy. When you ask for bankruptcy protection, you get your creditors to stop calling you or pressing ahead with any planned legal action against you. If you do take your case to a bankruptcy court, you should hire a bankruptcy lawyer who will act as your advocate in the courtroom. Your attorney will fight for your right to file for Chapter 7 bankruptcy. This will allow you to have your debts completely discharged. Seeing your business go bankrupt will be difficult if it comes to that, but it will be much easier than losing your home, or going through a personal bankruptcy.

Find Work As Soon As Possible

In some cases, business owners know ahead of time if their business is about to fail. Sluggish sales or a product that customers have no use for are signs that your company isn’t going to make a lot of money. Therefore, you should start sending in your resume to any company that may be hiring. In fact, you would be do well to have resumes sent out even when the business is doing well. Even when your business is failing, you still need to pay yourself, and pay your personal bills. Putting money back into your bank account can help you keep up with your bills until you find yourself on stable financial footing again.

Start Repairing Your Credit

The final step is to start repairing your credit. With hard work and determination, you should be able to increase your credit score back to where it was before your business collapsed. Secured loans can be the first step on the road to credit recovery. Once your credit is back to normal, you should have less trouble getting loans for yourself or a new company that you may want to start.

Your family finances don’t have to be completely ruined because your business failed. Instead, you should sell off assets, file for bankruptcy and find a new job as soon as possible. This should be enough to help you get back on your feet before you know it.