Small Business Debt Help – Alternatives to Bankruptcy

Posted on March 20th, 2019

It takes something to be an entrepreneur - commitment, leadership, vision, time, and … risk.

Financial risk, specifically, has many sole proprietors and partners seeking small business debt help during challenging times. Perhaps your business is experiencing seasonal lows in sales, or you’ve over-leveraged your resources to develop and grow your business with the expectation that it will generate greater returns, or maybe you’re just feeling the impacts of increases to the minimum wage and other shifts in the economy that affect us all.

Whatever the case, there are many alternatives to bankruptcy available to help you get through the growing pains of business ownership.

Negotiate with Creditors

If you have a good relationship with your bank, credit card company, and/or private lenders, they may be willing to work out a short or long-term payment plan with you directly. Why? Because they are more likely to get the full amount owed to them and keep you as valuable customer that way as opposed to going through a bankruptcy process.

You can also negotiate with creditors indirectly, with the help of a licensed insolvency trustee in the creation of a Consumer Proposal (if your personal debts do not exceed $250,000) or a Division 1 Proposal (if your personal or business debts are a minimum of $250,000).

Business Advisory can help small businesses overcome financial challenges

Business Advisory

“One of the greatest values of mentors is the ability to see ahead what others cannot see and to help them navigate a course to their destination.” - John C. Maxwell

As much as we want to be, have, and do it all, sometimes we just don’t have the knowledge, experience, or skill set to solve every problem our business faces – especially if we are doing it all on our own. Business advisory services are one way to expand your team, develop your business savvy, and discover alternatives to bankruptcy that have worked for other entrepreneurs who were once in need of small business debt help. We can also help you create a Business Survival Plan for the short, medium, and long term.

For more formal and ongoing guidance, you may even want to consider adding an Advisory Board to your team.

Learn More about Business Advisory

Reduce Costs

One of the quickest and simplest ways to reduce your debt load, is to reduce costs. Do you really need to carry that many products in your store? Is there a way to automatize routine tasks, so your employees can put their time and skill set toward more profitable activities? Do you even need to pay rent for a brick and mortar retail location in today’s digital age?

The answers to those questions, naturally, are dependent on the nature of your business and the industry you are in, but if you can be brutally honest with yourself about the answers, you might be able to save your business.

For more questions to send your creative and analytical minds in a cost reducing direction, speak with a business advisor and set up a customized brainstorming session.

Business Restructuring is like spring cleaning for your business systems and procedures

Increase Cash Flow

Easier said than done, right?

“Increase cash flow” may be the most obvious answer to your conundrum and every entrepreneur is working with the intention of having sales go up, not down. So, what do you do when what you’re doing isn’t working?

Here are some ways to increase cash flow when sales and resources are unexpectedly low:

  • Do a fire sale of all your stale inventory that hasn’t moved in the past year
  • Sell assets you no longer use (like outdated equipment, vehicles, displays, computers, etc.)
  • Ask your existing customers for referrals (and give them a gift for their help)
  • Do a cross-promotion with another complimentary brand or business
  • Launch a new product line or service with the resources you already have (get creative!)
  • Find a new product that is in season and can be drop shipped to your customer (you’ll make less profit per unit, but don’t have buy the products in advance)
  • Use the downtime to improve your e-commerce site’s SEO and seek publicity
  • Hold a brainstorming workshop with your team and tap into their creative thinking potential
  • Speak with a business advisor to get an outside opinion

When looking for small business debt help, there are many solutions available to Canadians

Raise Capital

Government Grants are one way to raise capital when overwhelmed with small business debt and Innovation Canada has a quick and easy online tool to help you identify which grants and granting agencies might be a good fit for your business’s current funding needs.

If you have incorporated your small business, you could potentially seek a business partner who enjoys the challenge of turning a business around and sell some of your shares to inject not only financial capital, but also human capital, which (if you pick your partners wisely) can also add to your business: a) expertise, b) strengths that complement your weakness, as well as c) the empowerment and momentum that comes from be in something together and not having to figure it all out on your own.

Crowdfunding can also be a great way to not only raise capital quickly, but also bring awareness to your brand/business, develop a sense of community with your customer base, and learn more about who they are, what they want from your business, and what you can do differently (from their perspective) to incentivize them to make use of your products and services more often. Your fans want you to succeed!

Business Restructuring

Similar to business advising, business restructuring uses a more hands-on approach to challenge the assumptions you have about how your business ought to work, so you can steer your business back in the right direction. Instead of simply offering advice, suggestions, and inspiration, qualified professionals can come to your place of operation and help create new, better working systems for you and your team.

Learn More about Business Restructuring.

Beyond Small Business Debt Help

Remember, if your business is a sole proprietorship you do not have the same protections as a corporation. That means you, personally, are on the line. So, while you are looking for solutions for your small business debt, consider also exploring personal debt help options too.

You might also be interested in:

Lending to Your Company: Protecting Your Shareholder Loan, Part I

Lending to Your Company: Protecting Your Shareholder Loan, Part II

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