They didn’t call the movie “Risky Business” by accident. All business operations involve some degree of risk…and sometimes that risk turns on you and your company faces serious financial problems.
It happens. Many owners, officers, and managers often overreact, act in haste, or make one of these 5 major mistakes because they:
- Refuse to radically reduce overhead. (Get rid of over-paid staff and unprofitable “ventures” now!)
- Fail to understand and act upon financial reporting. (Control cash-on-hand, always take care of creditors, know and understand your P&L and balance sheets.)
- Give creditors additional collateral in the company’s property or Accounts Receivable. (Unwittingly making your creditors you partner can hamstring your ability to effectively deal with any future lienholder.)
- Lie to creditors. (If you opt for bankruptcy, the lack of transparency can haunt you in front of a judge.)
- Refuse to open your eyes and deal with reality. (If the company is hurting, face the facts, make drastic changes, and get professional help.)
You may own and operate a business successfully in “good times”, but that doesn’t mean you actually have the skillset to navigate through stormy weather when it comes. It takes experience, training, and genuine knowledge of your options so that you can make the absolute right choices in times of trouble.