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BY SUZZANNE UHLAND
10 Lessons To Be Learned From Bankruptcy
10 Lessons To Be Learned From Bankruptcy
The word bankruptcy is an expression that sends shivers through some people’s spine by just hearing it being mentioned. The term has gotten a very bad reputation because there are those out there who associate it with failure and disappointment.
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While bankruptcy is not a nice experience for a company, it is worth noting that like every occurrence you go through in your life can be processed as a learning opportunity, and as such, you should attempt to make the most out of it and come out wiser in the end.
10 Lessons To Be Learned From Bankruptcy
Bankruptcy is defined as the legal status for an individual, or a company in this case, that cannot pay off their outstanding debt. This status is usually sought as a last resource for those overwhelmed by credits and loans, as it does have lasting consequences like repossession of goods and future difficulty to have access to lending.Today, here at Suzzanne Uhland blog, we want to talk about some of the most important lessons you can learn from going through a bankruptcy ordeal.
Financial Trouble is more common than you think.There is no such thing as a “type” of company that goes into bankruptcy. Financial trouble is something that can happen to anyone, regardless of the social status, cultural background or even company size. Going through a bankruptcy may seem like the end of things, but you couldn't be more wrong. Financial setbacks sometimes happen to the most successful of companies, as they are part of the journey to success.
10 Lessons To Be Learned From Bankruptcy
Understand when is time to fileSometimes people are unable to make the call to declare bankruptcy. It is part of being responsible and a great leader to be able to have the vision and the fortitude to accept that sometimes the mission cannot be accomplished with the current approach. Filing for bankruptcy allows the company to breathe and possibly readjust strategy, so making this shift in a timely manner can make a big difference.
You don’t have to start from zero.It doesn't mean you have to start all over again. A bankruptcy is a reset for many aspects, but at the same time is letting go of something that was not working. The experienced gained and all the work obtained from prior efforts is not wasted and it can be used to establish strategies that will succeed.
10 Lessons To Be Learned From Bankruptcy
Is not a scary as you think it is.Even though this type of situation is not desirable, one can definitely look at the bright side and see that it can be quite liberating. Bankruptcy is a way to start over and like we mentioned before, to readjust your focus to gain perspective.
Budgeting is key.The best way to budget is to have a clear picture of your expenses. It happens quite often when it comes to small businesses, that a set budget isn’t always clear and that is where the problem begins. Bankruptcy can be an eye-opener for this situation, and one of the things that almost every company that manages to turn it around can agree on, is the fact that a proper budget could have avoided their mishap.
10 Lessons To Be Learned From Bankruptcy
Be confident but realistic.Being confident gives you the drive you need to understand that your team has what it takes to succeed. It is important not to lose that confidence and that ability to see your own strengths as the tools you need to make a difference. However, it is necessary to understand the gravity of the situation and to accept that while you may have what it takes, you were probably using it incorrectly. Not being realistic may take you to ignore the situation and start making decisions to remedy things when it is too late.
Be honest about the situation.Be honest with yourself, with your team, with the company and with the stakeholders. Being honest can really go a long way, even if you think that it may work against you. Honesty is always rewarded in confidence, so be as clear and as open as possible about the situation and its inherent gravity.
10 Lessons To Be Learned From Bankruptcy
Understand the dangers of excessive leverage.Utilizing borrowed money to invest in assets is a high-risk strategy. The fact that leverage is a double-edge sword is no mystery to anyone. The clearest example of this can be seen during the burst of the US housing bubble during the early 2000’s. Subprime lending allowed many to borrow and get involved with real estate in the hopes to getting large returns on their apparently great investments. The problem was that as assets plummeted, so did their losses.
Remain competitive.The industry moves at a very fast pace, and especially nowadays. If you are not staying up date, competitive and relevant within the field, you might as well get ready to experience bankruptcy once again because you will be back to where you started.
10 Lessons To Be Learned From Bankruptcy
Keep it simple.Play on your strengths and understand what it is that your company can do successfully. By minimizing distractors you can build upon those areas you are experts at and grown from there. Keeping it simple should become the main general focus when it comes to processes within your company and a practice that is common throughout all levels of the business.
