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3 tips for (re)building a business after Chapter 7 bankruptcy

On Behalf of | Oct 26, 2023 | Bankruptcy

A Chapter 7 bankruptcy is an aggressive financial move that can significantly diminish what a business owner owes. Unsecured debts are eligible for discharge after a successful Chapter 7 filing, which may help someone struggling to manage business-related expenses regain control over the company.

They could also potentially discharge business-related debts to move on with their lives and begin a new business in the future. Those hoping to rebuild business operations after a Chapter 7 filing will need to employ a long-term perspective throughout the entire process. The following are some of the best moves for those hoping to rebuild a company – or to build a new one – following a Chapter 7 bankruptcy discharge.

Networking with those in better financial circumstances

Someone with a great business idea but a history of financial challenges may have a hard time getting the financial support they require to rebuild or start a new business afterward. Beginning a business partnership with someone who has more financial resources or a stronger credit history can be a way to start moving on professionally as soon as possible after challenges related to entrepreneurial endeavors.

Reviewing pre-bankruptcy finances carefully

Sometimes, factors outside of someone’s control directly lead to their need to file for bankruptcy. Disruptions in the supply chain or a breach of contract on the part of another party could leave a company unable to fulfill its obligations and generate sufficient revenue. Those who take the time to identify what factors caused organizational financial struggles will be in a better position to plan to avoid those same challenges in the future.

Finding ways to reduce operational costs

Partnering with multiple suppliers to help ensure competitive pricing and consistent supply lines could prevent financial challenges in the future. Looking for lower-cost facilities and other means of reducing the costs that most contributed to a company’s budgetary struggles makes a big difference for the purposes of future financial solvency.

In some cases, businesses may need to streamline what they offer to reduce what it costs to operate the company. Focusing on a few key products or services is often much more sustainable than trying to offer a broad assortment of different products and services. Companies that attempt to grow too fast, either by offering too much or moving into too many locations, are often among those with the most challenges sustaining that growth.

Reflecting on the issues that contributed to the necessity of a bankruptcy filing and adjusting accordingly can make a big difference for those contemplating Chapter 7 bankruptcy and hoping to achieve business success in the future.