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Emergency treatment for critically
injured business
Dear Small Biz Adviser
I started my business in 1989. You know the saying, "Feast or famine"?
How about, "A loan and a prayer"? I have used up all my personal
resources to continue this business and can't come out of it. Can
you help?
Cynthia
Dear Cynthia:
It sounds as if you need to evaluate whether
to bail out or try to save the business. Let's examine both.
Let's begin with efforts to save the business,
assuming you are still interested -- and I'm betting you are. Anyone
who has toiled for more than 11 years in a venture probably would
want to find a way to salvage that investment.
First, begin this odyssey by paying a visit
to as many of the following small-business assistance agencies as
possible:
- Small
Business Development Centers provide initial counseling which
is free and confidential. They no longer provide extended counseling
services to startups, so you qualify for that service from them.
Having worked in and with the agency over the years, I can tell
you there are many qualified counselors, and they will be straightforward
with you. If they don't see any chance of survival, they likely
will tell you.
- SCORE,
the Service Corps of Retired Executives, offers counselors who
are amply qualified to analyze all the elements of any business
operation from management, operations, marketing, finance to international
trade and more. They also offer free, confidential counseling
at low-cost and free workshops.
- Women's
Business Centers is a network of more than 80 offices nationwide.
They are true advocates for businesses owned by women.
- If you are of African-American or Native
American, consider the assistance of the Minority
Business Development Centers and the Native
American Business Development Centers.
I encourage you to seek help from as many of
these agencies due to the minimal cost and the varied opinions you
may receive. You need a business doctor. Survival is the issue,
and you would like more than one opinion.
Another place to go is the bank where you maintain
your operating accounts. Surely, the bank does not want to see you
fold. If you close, there go the accounts. And if you have a loan
at the bank there is the even greater alarm of a default. Ask to
speak with a representative of the small-business program, if it
exists, or to a commercial-loan officer. These officers are equipped
to view financial statements and ask business-related questions
designed to find the failings and devise some possible solutions.
Be patient with all these people. You will probably
find yourself answering the same questions several times. But you
need help and you need as many qualified perspectives as possible.
The only thing this is costing is a little time, and you can afford
that in trying to save the business.
You can also look for a white knight -- a partner
or partners willing to give your business an infusion of fresh cash.
Not many potential partners are willing to fund "charity cases,"
so you'll have to persuade them that you have a realistic chance
of returning the business to profit.
Now, the ugly side of the coin. If none of this
works, and it looks truly bleak, you have these options:
- Sell
the business outright to the highest bidder.
The floor for your bidding is the one that lets you meet your
liabilities and escape unscathed. If you have an established customer
base and there were extended periods of gross sales and net profits
in the more recent past, this may serve the basis for upping your
selling price.
- Liquidate assets to
pay off the debts. If the sellout does not provide sufficient
funds to pay off all the debts, then you may want to consider
negotiating extended terms to your debtors. Don't be afraid to
talk this through with your debtors -- especially unsecured debtors.
- Obviously, if the first two options do not
work you may be forced into the unspeakable -- voluntary
bankruptcy. In this case, contact a lawyer immediately.
There are issues of secured and unsecured creditors, the amount
of liability vs. realistic liquidation value of assets and the
type of bankruptcy to be considered.
In short, you can either take steps to save
the business, rid yourself of the business or file bankruptcy.
I wish you the best in making the right decision.
Bankrate.com writers base their answers on our editorial
content and advice of financial professionals. We make no claims
or representations about the accuracy, timeliness or completeness
of such content, advice or the answers provided to you. Our content,
advice and answers are intended only to assist you with your financial
decisions. However, by its nature such information is broad in scope.
Your financial situation is unique, and our content, advice and
answers may not be appropriate for your situation. Accordingly,
we recommend that you get different opinions and seek the advice
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final decisions or implementing any financial or investment strategy.
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