Partner Content

How to avoid bankruptcy for startups

on


The trouble with startups is there’s no specific playbook to download, buy, or even borrow, to know how to run the business correctly. There’s no right way; every startup does things a little differently, and everything is mostly done through trial and error.

However, one thing that needs to be dealt with as precisely as possible are the finances of your business. Poor credit management and bad financial planning are some of the reasons why startup companies fail.

Here are a few things you can do for your startup company to avoid bankruptcy.

Set a budget for your business

At the start of the fiscal year, always make sure to know how much money you have to work with. From purchase requisitions to paying suppliers and other operating costs, it can be very easy to lose track of your business finances. Plan the expenses in advance by having a meeting with key stakeholders in your startup to determine how much needs to be spent where, and make sure to get their buy-in so they can stick to the budget.

Reduce your business expenses

Some startups often dream big but don’t go about it the right way. In an attempt to become the next Google, Netflix, or Facebook, they spend a lot on creating an office culture mirroring that of successful startups. However, what works for these well-established companies may not be working for their business, especially since they’re usually still in a development phase. If you’re in a similar situation, take a step back and reevaluate the costs you’re currently generating. Find out in what areas of your business you can cut costs.

Diversify or strengthen your income sources

Apart from cutting down on unnecessary costs, you can also take a look at how your business can better its revenue. For example, you can increase product sales by offering free merchandise and discounts.

Apart from increasing product sales, you can also look at stabilizing your cash flow. Having a more consistent and stable cash flow means more freedom to experiment and diversify your business’s source of income. Take a look at offseason times so you can compensate for the lean months. This can help improve the overall financial health of your business.

Communicate with creditors and lenders

Contrary to popular belief, avoiding contact with your creditors can actually be counterproductive. Do you know what banks and lenders dislike more than people or businesses who don’t pay on time? People or businesses who can’t pay at all.

If your business is lagging behind on payments, make a list of the suppliers, creditors, and lenders who need to be paid. Prioritize those that need to be paid urgently. By speaking to the institutions your business owes money to, you may be able to negotiate a longer time to pay back the money you owe them.

Talk to an expert for advice

Getting the help of professional debt mediators can be one way for you to get your business’s finances in order. If you do find your business facing bankruptcy, you may want to get expert help. If you’re looking for an insolvency practitioner Glasgow, Scotland, there are a number of professionals there who offer expert advice and can help you with your company’s financial problems.

About Business Woman Media

Our women don’t want to settle for anything but the best. They understand that success is a journey involving personal growth, savvy optimism and the tenacity to be the best.We believe in pragmatism, having fun, hard-work and sharing inspiration. LinkedIn

Recommended for you

What Do You Think?

Your email address will not be published. Required fields are marked *