Bankruptcy is a last resort for businesses that can no longer repay their debt. It’s not something to be feared, but instead an opportunity to restructure your business and get it back on its feet. Statistics Canada estimates that there were over 5,000 business bankruptcies in Alberta in 2017. While this may seem like a high number, bankruptcy rates have been steadily declining since the recession of 2009. Furthermore, businesses that file for bankruptcy are almost always able to reorganize and come out stronger than before. If you’re starting up your own business one of the first things you should do is check the statistics profile for your city or region so you can understand what the market looks like and how you can set up in that area successfully.
Key Findings from the Statistics Canada Report
– Business bankruptcies in Alberta are highest among men rather than women. – Calgary and Edmonton have the highest business bankruptcy rates. – The oil and gas industry is the most vulnerable sector to bankruptcy since the decline in oil prices. – Bankruptcy rates are highest in rural areas. – The median amount of time a business takes to file for bankruptcy is two years. – Businesses that are just starting up are actually more likely to end up in bankruptcy than those that have been in operation for five years or more. – Small businesses are more likely to file for bankruptcy than large corporations. – Businesses that have fewer than five employees are the most likely to file for bankruptcy.
Improving Cash Flow is Key
Although it’s important to have a long-term plan for your business, you must first focus on short-term cash flow and liquidity. Make sure you have enough cash to meet your day-to-day obligations, especially with payroll. Consider hiring a business advisor in order to help you set your budget and make sure you’re not overspending. It’s also important to make sure that you have short-term financing options in place in case your customers take longer than expected to pay their bills.
Don’t Procrastinate with Repayment
If you are behind on payments to creditors, try to make arrangements as soon as possible. It’s best to make a deal before your creditors take legal action against you. In some cases, you may be able to make a payment arrangement or apply for a payment deferral if you can prove that you don’t have enough cash flow to make the payments. It’s also important to make sure you’re not paying any unnecessary fees or making any mistakes on your payment that could end up dragging you down even further.
Get an Accounting Certification
It might seem like a strange suggestion, but it’s actually a very important one. If your business is audited by the government, a chartered accountant can help you save money on fines and fees by presenting your situation in a more favourable light. In the event that you’re ever forced to declare bankruptcy, an accountant can help you navigate the process and make it go much more smoothly.
Hire a Bankruptcy Lawyer
If you’re behind on payments and feel that you might end up filing for bankruptcy, it’s a good idea to hire a bankruptcy lawyer as soon as possible. A lawyer can help you navigate the process and get it done as smoothly as possible. A lawyer can also help you start setting up a repayment plan with your creditors before you file for bankruptcy so you don’t fall even further behind.
Stop Loss Order and Fraud Protection
If you have outstanding debts that amount to more than $5,000, the government will apply a stop loss order on your assets. This means that your creditors can seize any assets you have to satisfy your debt. It’s best to file for bankruptcy before this happens. You can also put a fraud protection order in place if you ever suspect any employees or contractors of stealing valuable company information or assets.
Conclusion
Businesses are likely to see more success if they focus on improving cash flow and maintaining a healthy balance sheet. It’s also important to prioritize customer service and tailor your products and services to meet the needs of your target market. By taking these steps, businesses can lower their risk of bankruptcy and increase their chances of success.