Long after the human patients recover from the coronavirus, small businesses will still be ailing.
And long nights will be spent deciding whether to try to stay in business. People can check Canberra Business Valuations services for the best business franchises.
As bankruptcy lawyers, we’re going to see people in pain trying to assess what to do next.
According to Andrew Defrancesco, business owners may see the exit heading through the bankruptcy courts, but that may be neither necessary nor wise.
Here’s my list of considerations as I try to think broadly and flexibly with clients about their business futures.
The desire to continue
According to Darwin Business Valuations, entrepreneurs are the toughest, most optimistic folks you’ll meet. In most times, the entrepreneur is just certain that, with a little more time, and a little more work, she can make the business work.
So if the businessman in front of you is drained and defeated, chances are that the will to pull off a difficult recovery doesn’t exist.
But before endorsing walking away, see if some new ideas or new perspective energize the client.
If no, perhaps there’s a business to hand off to another, but we need to accept and support the person who has nothing left to devote to the business.
Is the business viable
When the lock-down is over, and we creep back to the new “normal”, the next gating question is whether there’s a post pandemic market for the business’s product .
As the counselor, sitting on the outside, our job as lawyers is to test the client’s analysis.
And if there is demand for the product, how long is the ramp up? What financial resources does it take to survive the ramp up? And what’s the likely volume of business to be expected?
Reorganize for survival
The pandemic has forced change and re evaluation on all of us. When things are already disrupted, considering more change seems less overwhelming.
Could the business continue with
- fewer owners
- fewer employees
- no brick and mortar premises
- narrower market
- broader market
- partnered with others
Embrace the disruption and move the pieces around the board, at least in your mind.
New debt and lingering death
Governmental responses so far to the economic body blow wrought by the pandemic suggest that business loans will be at the center of a recovery strategy.
Long before the pandemic, too often the business financing tool was the “business” credit card, at 18-24% interest. Too few business plans considered what kind of profit margin was required to retire such expensive capital.
While I expect the interest rates on offer to run the gamut, a business currently in trouble has to think hard about viability sustained by simply borrowing more.
Wind down and move on
Writing the existing business off as a lost cause isn’t necessarily a binary decision. Perhaps the existing business entity folds, and the person across the table remains in the field, as a proprietor rather than an entity, or as an entity after a personal bankruptcy.
Maybe, this is the time to change industries, take a salaried job, return to school, or ????
Challenges for all
While bankruptcy lawyer may be in high demand, the challenges for us are no less real: helping battered businesses in a landscape of economic rubble and uncertainty.
Isn’t it the Chinese curse: may you live in interesting times.