Bounce Back Into Business After A Bankruptcy

Bounce Back Into Business After A Bankruptcy

If you’ve recently endured a bankruptcy with your business, you might be feeling hesitant to start another business. But despite what you may have heard, you’re fully allowed to start another business after a bankruptcy! So if you have a business you want to dive into, you absolutely can.

But just because you can doesn’t mean that there won’t be struggles associated with starting a new business post-bankruptcy. After all, bankruptcy may erase your debt, but it’s not a “get out of jail free” card–if you don’t manage your money well, you could be back in the same boat, and possibly facing bigger consequences. 

Luckily, there’s plenty you can do to ensure that your next business is more successful. So pick yourself up, head back to the drawing board, and get ready to start again with these tips.

Don’t Let A Low Credit Score Stop You

Unfortunately, a bankruptcy will cause a big hit to your credit score, which can make starting up your business this time around harder than the first time. If you try applying for loans, you’ll likely have to explain the dip in your score, and if your credit is too low, you may not get approvals because of it. That said, you don’t have to give up hope on financing. First, make a solid business plan that explains what your business will be and how it will be successful. Then, you can present it to a range of alternative investors, including:

  • Private institutions
  • Angel investors
  • Venture capitalists
  • Crowdfunding platforms
  • Business-based grants

And if financing isn’t an option? You’re still able to start a business! Look into offering services with low overhead costs, such as freelancing or other digital-based work, and then work your way back into being a full-service business. Alternatively, take some time to build up your credit and capital outside of your own business, whether that’s acting as a subcontractor for someone else or getting a job to pay the bills while you get back on your feet.

New Business, New You

It’s not recommended to jump in with a “relaunched” version of your original business after a bankruptcy. So instead, look into other areas that you would be happy to work in. You can even use the same talents you put to use in your last business, just in a different way. For example, if you owned a cleaning business, you can channel what you learned into a rental management service for Airbnb houses. You can even find an area that’s more aligned with your passions by monetizing your hobbies! 

Whatever area you go into, though, you’ll want to do plenty of research into the industry and the customer base for it. By going in aware of the situation outside of your business, you’ll be able to have more foresight and make a game plan of how you can succeed.

Build Your Network

No business is an island, and post-bankruptcy, the value of connections can’t be overstated. You’ll want to reach out to the network you already have, as well as building new connections that will help your business thrive. Attend industry events, join business organizations, and engage with online communities to expand your network. 

It may also be worthwhile to look for a mentor to get you through the tough start that comes after a bankruptcy. Look for mentors who have navigated similar challenges and are willing to share their knowledge and experience. Mentorship can provide valuable insights, open doors to new opportunities, and offer the kind of support that only those who’ve been in your shoes can provide.

Revamp Your Image

There’s nothing morally wrong with having to file for bankruptcy; in fact, in 2023, 17,051 businesses filed for bankruptcy. That’s hardly a small number, and many of these bankruptcies happen due to circumstances outside of business owners’ control. Unfortunately, that doesn’t stop the fact that many people view filing for bankruptcy as a stigma, and it’s one that can stick with you even as you start a new business.

When it comes to re-establishing your public presence, it may be for the best to get a professional marketing team to help craft your image. They’ll know the ins and outs of using social media, publicity campaigns, and other tactics to help give your social image a boost it needs to get new customers–and maybe even old ones–back through your doors. If you can, try to find a local marketing agency; they’ll understand your area at least as well as you do, and they can work with that knowledge to present the very best version of you and your business to the community.

Take Your Finances Seriously

Your credit and reputation will play a significant role in the success of your new business. Rebuilding will take both time and effort, and you’ll likely feel the stress of it at the start. But the process can be accelerated through consistent, responsible financial behavior. Pay all bills on time, every time, and keep balances on credit accounts as low as possible. 

You’ll also want to be sure your communications are open, honest, and well-documented. Engage with vendors and creditors in a transparent and proactive manner, addressing any issues head-on. By presenting yourself as trustworthy and communicative, you can show yourself as fiscally responsible and start building up a rapport with vendors and creditors to get you back on the path to success.

Get Professional Help

If you’re still going through the bankruptcy process, you know how overwhelming it can be. You may be juggling around Chapter 7 (which is where your assets are seized), Chapter 13 (where you can pay back your debt over time), and Chapter 11 (which is specifically for business bankruptcies), which can all leave your head spinning! And amidst all of that, you’re probably wondering whether it really is okay to start another business.

If you’re worried that you’re doing something wrong with your new business, it’s best to ask the people who know bankruptcy law inside and out. Get in touch with a bankruptcy law firm to learn everything you need to know about what your bankruptcy repayments will look like and how starting a new business can affect them. A good lawyer will help you work your way through your bankruptcy as well as giving you counsel on how to proceed with your business. It’s well-worth the investment to start your new business with some peace of mind.

Don’t Be Afraid To Celebrate

You might feel guilty for celebrating the little victories that come with starting a new business. Don’t be! It’s essential to find the good as you start a new way forward after a set-back like bankruptcy. Instead of waiting for things to go wrong, recognize and celebrate these wins as you achieve them. 

Each small milestone is another step forward, and it can be incredibly validating to recognize that you’re making your way out from the shadow of your bankruptcy. Celebrating these victories also helps your team if you have one; it can maintain morale, boost team spirit, and build momentum for the next phase of your business. Take pride in your accomplishments, and share them with your network to keep the positive energy flowing–and keep yourself moving forward.

Bankruptcy can be incredibly hard, but it’s not the end of your journey as a business owner. So after you take some time to regroup, don’t be afraid to dust yourself off and try again. You’ll be able to take the lessons you learned from your last business and use them to push yourself forward and create the best business you can. Because it IS possible to find success after bankruptcy!

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