Avoiding Bankruptcy as an Entrepreneur

When starting a new business, the last thing an entrepreneur wants to hear is that it could fail. This is especially true if the person left a full time job, mortgaged property or racked up credit card debt to fund the business. Unfortunately, certain factors can lead to a business owner needing to file bankruptcy. Let’s hear from Diane (name changed) about her experience.

“I’d wanted to be a business owner for years, and when a friend of mine, Mary, told me about her technology start up idea, I jumped right on board. Business started with a bang. Within 6 months, we’d launched an app and two service ideas that were well received by our target market. We hired a couple of employees and were even able to pay everyone, including ourselves, once every 2 weeks!

going-out-of-businessThen a few months later, things changed. A competitor launched with an admittedly better app. Instead of retooling our product, Mary threw a lot of marketing dollars at it instead. Sure, more people bought, but not enough to make a profit.

Because I love volunteering, I committed myself and one of the team members to teach app development to teens once a week for a couple hours. The non-profit loved the service so much, they asked us to volunteer three times a week. I said yes. That meant at least 6 hours a week out of the office for both us, which definitely didn’t add to the bottom line.

Plunging into Bankruptcy - Financial SpeedometerA year later, the company was struggling to make payroll, so Mary and I started using our money to pay the employees. Then we had to use our personal money just to keep the company afloat. After six months of this, Mary and I were both behind on all of our personal bills. Creditors kept calling, and the only logical choice we had was to file bankruptcy. Since we started the company together, we were going to get our personal finances in order together, too. We looked far and wide for a great bankruptcy attorney in Palm Beach Gardens and felt better after hearing we had options. The attorney explained everything clearly and helped me choose between Chapter 7 and Chapter 13.

It’s been a year since my bankruptcy was granted, and I am on track to rebuilding my credit. I have a few more business ideas to explore, too.”

Here are a few things you can learn from Diane’s experience.

  • Charity is great, but don’t get sidetracked by too many projects that don’t generate revenue.
  • Stick with what’s working and leave the rest.
  • Be flexible and be able to adapt to market changes.
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About Dequiana Jackson

Dequiana Jackson, Founder of Inspired Marketing, Inc., helps overachieving women entrepreneurs conquer limiting beliefs and create marketing plans that grow their businesses. This includes one-on-one marketing plan development, digital product creation, web design and content marketing. Dequiana is the author of Know Your Business: How to Attract Ideal Clients & Sell More and runs the award-winning blog, Entrepreneur-Resources.net.

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