Most people think that going bankrupt is the worst possible thing that can happen to a business… and that’s nearly true. In reality, though, the worst thing is to go into bankruptcy and not learn anything from the experience.
Though bankruptcy can seem catastrophic when it happens, it also gives you the opportunity to try again; this time with 20/20 hindsight. Of course, the best option of all for a business owner is to learn from others who have undergone financial collapse and by reading up on the various free bankruptcy information online.
Give your company a competitive edge by studying the following two cases. They might just transform your business.
Be Flexible.
One of the most dangerous things a business can do if it hopes to succeed is to establish a business plan, then refuse to deviate from it. Plans are undeniably helpful, but they can’t anticipate every outcome, and they can actually compel your firm to act against its best interests.
This is exactly what happened to RadioShack, one of the most famous bankruptcy cases in recent years. The company’s original model focused on hobbyists: the kind of tinkerers that fairly rare nowadays.
As computers and even e-commerce transformed the market in the 1990s and early 2000s, RadioShack remained stuck in the past. The company had sparse inventory, much of which was barely relevant anymore, and tried to serve the MP3 generation with vinyl-era strategy and products.
If RadioShack had operated smartly and flexibly, rather than cling to its old business strategy, it would have regarded the technology revolution as an opportunity to refocus and develop a new strategy. For today’s firms, that may mean developing a subscription strategy, using social media, and rethinking web design and marketing style.
In a few years from now, it will mean something different, so everyone — and that means you — needs to be ready to adapt.
Ask For Help.
Another critical rule every company should follow, whether it’s financially vulnerable or doing well, is be willing to ask for help. This may seem obvious, but many firms don’t ask questions or seek assistance when they’re struggling, usually to keep up appearances.
These same businesses never recognize that there’s almost always more than one option; that often, outright failure is avoidable. And yes, this is true even in the case of bankruptcy.
One of the primary exits from the bankruptcy trap is to grasp the different types of bankruptcy. Though some forms will be disastrous to your credit, others – specifically Chapter 13 Bankruptcy – allow those with consistent income to restructure debts, rather than just go into liquidation and wipe the slate clean.
It’s an ideal opportunity for those who think they’ve learned a few lessons from their failure and want to start over again.
When the bank Lehman Brothers went under, the only chance the company had to get back on its feet would have been a federal bailout. When the government opted to leave Lehman Brothers out of its banking support program, however, the company was forced into liquidation through Chapter 11.
By contrast, Chrysler went through Chapter 11 reorganization in April 2009, but within two years the company was profitable again. In order to thrive, Chrysler needed both government support and a control shift: the corporation was handed over to the United Auto Workers union, and Fiat became a minority stakeholder.
Bankruptcy can do substantial damage to your company’s self-image and reputation, but it doesn’t have to destroy you altogether. If you’re willing to be flexible and reach out to those who have the necessary expertise to support your survival efforts, you can turn your company around and rebuild with your hard-earned wisdom.
