Let’s face it, even the best businesses have been negatively affected by the rough economic situation the last decade has brought. For some, the recovery has been slow (or possibly even nonexistent). That is not to say that there is no hope. Before considering bankruptcy, it is important to think about some ways you can restructure your business finances, hopefully avoiding bankruptcy altogether.

Restructuring Small Business Finance

Here are 5 of the best tips for business restructuring:

1. Negotiate or settle business debt – The most common reason for filing a Chapter 7 bankruptcy is to liquidate assets in order to erase debt. Of course, this means you will have to give up control of your property or assets. The option to pay your debt or to negotiate with your creditors should be exercised if possible in order to avoid bankruptcy or asset forfeiture.
2. Create a solid budget – Really, the lifeblood of any business is its cash flow. Having a thorough and in-depth knowledge of your finances is the first step to reinvigorating your business. Set a monthly and yearly budget. Make sure you are reviewing it regularly. Part of this will be establishing the amount of money your company has available to pay down debt as part of your restructuring plan. Eight percent or more of your debt per month is good. If you cannot afford that, seeking professional assistance is recommended.
3. Seek to consolidate debt – Owing your debt to one creditor is almost universally better than owing to multiple creditors. Along with that, it should come as no surprise that you should make an effort to consolidate your debts to a single source. That will save time and money in the long run, both of which are vital to the future success of your business.
4. Liquidate assets – If you have any assets that can be spared or liquidated to pay down debts, it is essential that you make an effort to liquidate them. This is a difficult process, but if you were to file for bankruptcy it would occur anyway, so it benefits you to go ahead and take care of it ahead of time as a stop-gap measure.
5. Tough cuts – The tough cuts are the broadest tip, but perhaps the most important. You need to consider possibly laying off some employees, finding holes in your budget where money is leaking, and removing any portions of your business that are not positively increasing your cash flow.

Recommendations

Following the tips outlined in this article should put you on the road to financial success with your small business. If you are still having trouble, however, it might be time to consider getting some input from an outside source. Refinancing and restructuring can be difficult by itself, but bankruptcy can be a nightmare. Having a little bit of help along the way is always a benefit.

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