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The biggest thing a business owner has to worry about is their company going under. You may have personal investments in your company, or even assets like your home or car attached to the loans you took out for the business. It may be difficult to tell the difference between a low time and when you are looking at one of the company funding warning signs.
Stage 1: Slow Decline
Obviously, the first thing you are going to notice is that your business bank account is on a steady decline. Do you have to use more and more money from your loans to pay off bills? Even if it is a slow month, you shouldn't be on a continuous decline. Try to find the reason for it as soon as possible so you don't have to worry about going under. This may be the time to take out another loan or seek additional funding if possible.
Depending on the type of store you own, customers may start taking longer to pay you back. If you offer services and people are avoiding payment, it's time to take serious action. If at all possible, get customers to pay you before you offer your product or service. Although you do need your customers, you don't want to have to hunt down anyone for payment just so you can make your bills.
Stage 2: Unpaid Bills
At this point you are starting to realize that your company is really in trouble. You don't have enough sources to get more money or loans and you are faced with paying your bills late, or not being able to pay them at all. When this happens you may start running short of supplies, or have to cancel orders.
Once you reach the end of this stage your company is really in trouble. If you haven't been able to pull out of it you will have to stop paying certain creditors and taxes that are necessary for legally operating your business. Late and missing payments in these cases are not acceptable, so you should have a backup plan before this happens.
Stage 3: Closing Down
Once you reach this stage you have exhausted all of your resources and chances of recovery. Sometimes companies will try to work it out until they can no longer afford to pay employee wages. If you do not choose to close the company yourself, someone will sue you for unpaid bills and force you to shut down. It is regrettable, but many small businesses end this way within their first year of opening.
To avoid these company funding warning signs you should work as hard as possible to learn the best business management techniques. Company funding information is readily available if you need to know more about it. This is a website that gives everything you need to know about opening and managing your own business. It will help you avoid these financial problems and help guide you to success. With so much on the line, nothing should be more important than the success of your own business.
The Bankruptcy Abuse and Consumer Protection Act, signed into law last April, will take effect this month and bring with it some of the most sweeping changes in debt law in history. As the new requirements are much more strict, expensive, and time consuming than the old ones, consumers with problem debt are rushing to file now. But many others are wondering if their debt problems are serious enough to warrant the rather drastic decision to file for bankruptcy.
Here are a few things that may help you reach a decision:
# You have two or more major credit cards with outstanding balances – Credit cards work best when used for convenience, such as when you don't have cash with you or when it just isn't convenient to pay cash. They work less well when you use them as a funding source, as they represent a fairly expensive way to borrow money. If you have more than two major credit cards with outstanding balances that are high enough that you cannot pay any one of them off right now, you may have a problem.
# You make minimum payments only on your credit cards – The minimum payment doesn't even put a dent in your balance, and until recently, the minimum wouldn't even cover the interest accrued during the month. If you are only making minimum payments on your credit cards because you cannot afford to send more, then you may be in over your head.
# You are paying one credit card bill with another credit card – Taking a cash advance on a credit card is really expensive. The interest rate is usually higher than for purchases and the cash advance often includes an additional fee. If you are taking a cash advance from one card at 20% interest to make a payment on another at 20% interest, you are probably in trouble.
This list is by no means definitive or complete. Nor should it be construed as legal advice. But if you see yourself doing one or more of the things listed above regularly, it may suggest that your financial problems are quite serious. Now would be a good time to consult with either a financial advisor or a bankruptcy attorney. Financial problems only get worse when left unattended, so don't wait.