Getting your small business up and running again while still climbing out from under the shadow cast by a past business bankruptcy is a challenging – but entirely feasible – task.
The key is to map out in advance a strategy that will help you clear the obstacles you’ll undoubtedly face. Turn the financial misadventures of your failed business into tactics that can help you avoid all the pitfalls that tripped you up in the past.
Let the Past Be Your Guide
Before launching any new business venture, whether it’s a revival of your original business or something altogether new, you need to look closely at your mistakes of the past.
Get together with your close business associates and carefully review the factors that caused your first business to fail. You might even enlist the aid of a disinterested third party to ensure the objectivity of your review. Identify all of these factors and list them on a sheet for later study.
Factors that contributed to your earlier failure may fall into a wide variety of categories, including poor marketing strategy, inadequate capitalization or poor financial oversight, just to name a few. Once you’ve thoroughly dissected the missteps that led to bankruptcy, you can return to your list and develop a strategy that will – hopefully – avoid repeating any of your past mistakes.
To Rebrand or Not to Rebrand?
One of the most fundamental questions you must answer has to do with the root cause of your past financial failure.
Can that failure be traced to problems with your company image and product line or was it instead a reflection of poor financial planning? If you had a well-respected brand and product, it no doubt accumulated a certain amount of goodwill in the marketplace.
Trying to start over from scratch by rebranding makes no sense in a case where the bankruptcy did little to tarnish your product’s image.
If your past problems were essentially all financial in nature, it’s that side of the business that must be shaken up and reorganized.
If, however, your business faltered because the public wasn’t attracted to your core products or services, then carefully examine your reasons for trying to resurrect your previous business at all. If you plan to take things in an entirely different direction product-wise, then a rebranding is clearly in order.
One of the most basic challenges in starting – or restarting – your business is getting the money you need to launch and capitalize the venture during its start-up period.
You might want to consider adopting a business structure different from the one that failed. If, for example, your first business was a sole proprietorship that you financed personally or a failed partnership, it’s likely that you ended up filing a personal bankruptcy.
If this was the case, it will be more difficult for you to get the financing you need for your new venture because of the black mark on your credit record. Consider forming a small corporation or limited liability company. Such business structures keep your personal finances separated from the fate of your company. Whatever structure you select, however, don’t let yourself get talked into signing a personal guaranty, which will saddle you with company’s debt if it fails.
Draft a Comprehensive Business Plan
Using both your lessons from the past and your hopes for the future, draft a business plan that can be used as a road map for the launch and continuing operations of your company.
Make this plan as comprehensive as possible, offering back-up strategies for virtually any contingency the company may face in the future.
A good business plan can be helpful in convincing prospective lenders to provide financing, and most importantly it will provide detailed guidelines that you can follow step by step to make your business a success.
Cultivate and Protect Your New Image
Because you can’t control what others – including your customers – say about you, it’s essential that you stay on top of your online image as it takes shape in the wake of your new business’s debut.
You can create a company blog and/or website to put your best foot forward online. You might also consider calling upon the services of a company that can help you control your online reputation and private data.
Whatever you do, realize that there is oftentimes hope after dealing with the term bankruptcy.