Michigan Small Business, When Enough is Enough
By Kurt O'Keefe, Attorney at Law on Oct 6, 2007 in General Bankruptcy Information
Everyone who starts a business expects to make money. No one commences a business with the goal of ending up in Chapter 7 or Chapter 11 bankruptcy.
The sand dune is built one grain of sand at a time. Before a business owner realizes it, the situation can be overwhelming. The owner always sees the situation through rose colored glasses. You have to be an optimist, right?
It is better to be a realist. Many of the business owners I see opened their business on Monday expecting to take home the first profits that Friday.
My advice, before you open your doors, have enough in the bank to live on for a year, and enough to run the business for a year. At least, set some maximum dollar amount you will put at risk. When that is gone, stop! Fold up the tent, cut your losses, stop the bleeding.
A lawyer friend of mine says, you can stay home and go broke. You do not need to rent buildings, pay employees, buy computers, rent phone lines, incur other overhead and expenses.
Have a written business plan. Monitor it at least monthly against your actual receipts and expenses.
Do not assume all your customers will pay you! Especially in Michigan, other companies and individuals are under financial pressure. They also have rose colored glasses. They expect to make money, they expect to get paid, they think they will have the money to pay you, just give them another 30 days.
Next thing you know, your receivables are out of whack, and you are behind, telling your creditors the same things, as soon as you get paid, you will pay them.
Do not try to borrow your way out of a debt problem. Many of my clients start using the cash advances on their personal credit cards to put into the business.
Be aware that your business, whether an LLC or other form of corporation, will not likely get credit in its name, so you will be personally guaranteeing the credit extended to the corporation.
Of course, you do not expect that you will have to pay, the business is going to make money, otherwise, why did you go into it?
Many universities have business classes in which students will be glad for the assignment of analyzing your industry and forming a business plan.
Starting your own business is a gamble. Decide how much you can afford to lose before you get into the game. When that is gone, chalk it up to experience and move on.
If you cannot see a way out, time to call an experienced bankruptcy attorney.
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