Starting a business can be exciting, but when the economy is poor and business isn't booming as expected, this can cause duress in Pennsylvania. A few tips can help businesses in our state try to financially stay afloat during the toughest of times. Still, if they end up accruing debt that seems impossible to overcome, then Chapter 7 bankruptcy protection may be a viable and responsible option.
One way to keep a business strong is to assume more control over one’s inventory and checkbook. It can be important to verify that each cent that leaves the business goes to a creditor who is legitimate. Unfortunately, many small businesses become fraud victims. In addition, it is understandably essential that all of one’s inventory goes to customers rather than being embezzled by employees.
It is also helpful to make wise reductions in one’s operating expenses. Making rash cuts can cripple the business long-term, but not cutting enough can cause the business to financially flounder. If sales remain sluggish, it may be best to avoid paying warehouse and production workers overtime. Some employees may also need to receive a cut in their hours or accept temporary salary reductions.
Even though people usually start businesses with the best intentions, the business' liabilities might end up exceeding its assets as a result of unforeseen circumstances. When this happens, Chapter 7 bankruptcy allows a person to have his or her business assets marshaled and liquidated for creditors' benefit. These assets are sold and then reduced to cash that goes to the creditors. Finally, other unsecured business debt is formally discharged, thus providing the business owner with much-needed debt relief in Pennsylvania.
Source: entrepreneur.com, "7 Tips to Stay Afloat When Times Get Tough", Doug White and Polly White, July 2, 2014