Jeremy Theory About Bankruptcy

What do we mean by Bankruptcy?

In a most basic business sense, bankruptcy is a statutory status where a person or any legal entity becomes powerless to pay the debts to their creditors as per the given time period. The status can be announced either by the eyes/court of law or by the debtor himself. As a business, whether you have dealt with this status or not, it is important to stay positive and calm in such situation and must be aware of the ways to escape out from it skilfully.

Why Companies End Up Being Bankrupt?

There is no definite reason for bankruptcy, as it nurturing operations depends on different factors like poor finance, fluctuating market conditions, incapability of making rigid decisions and much more. If we talk about small business, then they are at risk where market conditions are always changing. There are uncertain boom and decline period prevailing in the market. It all depends on the consumer behaviour like how they respond or prepare for their purchasing pattern.

The next reason might be the poor choice of finances. For nurturing operations, businesses often take help from the bank in the form of loans and if at any point they struggle with their operations or activities, then these financers or loan providers do not provide help further. This way most of the business reaches the status of bankruptcy only.

The business often fails due to the lack of decision-making capabilities. They generally do not know how the area of management and finance can be channelized productively. Other reason may include situations like poor business location, lack of productive employees, fraud, natural calamities and many more.

How to prevent Bankruptcy?

The companies can either take proactive measures or they can bounce back from bankruptcy by clearing heir focus and aim in the long run. A pre-defined budget should be prepared where all the expenses or cost going to be incurred should be mentioned in advance. The next thing is to pay the bills whether small or big on time to escape out from the further burden.

The next best thing is to avoid loans with unnecessary and hefty interest amount. If taken, then these loans should be repaid prior to their due date only. It is ideal to keep a track of each and every activity whether small or big to know where the fund or investment is being diluted.

Businesses can keep a control on their decision making and planning process. Smart and well-versed decisions must be scrutinised before being implied. From the initial level, businesses should be brief about their activities, especially where the act of money is involved.