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  Bankruptcy is one of those business situations many founders in Nigeria and elsewhere don’t want to find themselves in. The fact remains that bankruptcy affecting an enterprise that provides solutions and services to people can be demoralizing to a founder. This is why in the face of bankruptcy, the last thing you must do is panic.
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The largest known bankruptcy was in 2008 when the world economy hit a depression. While many founders saw the period of bankruptcy as a time to call it a quit, resilient founders saw such a period as a time to go to the drawing board and start afresh, this time wiser. While many businesses parked up, others survived the storm.  In this article, I draw lessons from founders who lifted their startups successfully. Many of these founders suggest that founders undergoing bankruptcy, especially in this present time, should draw upon their entrepreneurial strengths and use the following tips to put themselves back on the path to doing what they love.

  • Remain Steadfast And Strong 

The first reaction to bankruptcy can be panic, fear, anxiety, anger and resentment. The big truth about this is that founders faced with bankruptcy must come to terms with the reality on the ground and that no amount of whining and moaning will bring them out of bankruptcy. They must carry on as usual, except at this time, they should remain steadfast and strong and see things from a different perspective.  One founder shared his secret to come out of bankruptcy. According to him, “he said to himself that ‘business must continue as’ and he must see things from a different perspective.”
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Rather than isolate yourself, reach out to experts, friends, peers, and associates to get their opinions on what to do next. 

  • Take A Financial Stock.

Another step to take in coming out of bankruptcy most successfully is to take a financial inventory of your business. Understand where you stand financially. Acknowledge how much you lost and how much debt you are into. Armed with this information, you will understand where you stand to manage your cash flow effectively. It will help you limit your burdens.

  • Review Your Budget

The period of bankruptcy is a time to live on a thoroughly-followed budget. Founders who have successfully overcome bankruptcy advise that startups facing bankruptcy must create a budget with a bare minimum amount of money and stick to it for their survival, and must be religiously followed. Founders in the face of bankruptcy must analyze their total net worth and cut down on expenses, save more, and yet still invest in more profitable ventures. For instance, a founder who successfully came into bankruptcy stated that she had to cut down her monthly budget from #100,000 to #20,000 and forced herself and her team to live on it for one year. She noted that she developed 30-day, 90-day and year-long financial goals and targets. These goals were followed religiously. At the end of a year-long journey, they were able to save millions, keep the company afloat and finally reestablish itself once again.

  • Be Transparent

Bankruptcy is a time to be transparent to all – coworkers, investors, family members, supply chain management and so on – especially those who wouldn’t judge you. The truth is that founders must realise that bankruptcy is not a thing to be ashamed of. It is a time to seek protection from those that genuinely care about your startup growth. A founder narrated how his father, a successful business leader, gave him a bailout. The most important thing at this point is to be as transparent as possible so that people can know where to help you.
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Finally, founders facing bankruptcy must exhibit a deep level of transparency to essential stakeholders and financial advisors who can help draft a strategy to avoid future recurrence.

  • Remain Focused, Passionate And Driven

Bankruptcy is a time to cut off unnecessary distractions and unhelpful commitments. A founder who came out of the 2008 global bankruptcy noted that he had to cut-off club memberships and other volunteering commitments temporarily to give his 100% focus to rescuing his business. He also said that he gave more time to his business by working longer hours, reaching out to more people and covering a lot of spaces which hadn’t been done before.  Bankruptcy is a time to set new goals and follow them with vigour, passion and deep-level focus. Also, bankruptcy is about letting go of unfruitful relationships that aren’t supportive of your dreams. It could be time-wasting friends and colleagues and cut off unnecessary expectations and dreams such as those Porsche cars you dream of and the Malibu vacation you intend to take. What should occupy your mind is getting out of bankruptcy as fast as possible. You can even cut off cable subscriptions and spend less time on social media.

A Final Word

Bankruptcy is not the end of the world. Founders must know that bankruptcy means only one thing is temporarily missing in your business: money. Other indexes such as your vision, passion, creativity, network and support system are enough resources to rely on to get you out of bankruptcy. Never face bankruptcy alone. Get help, especially from those who are interested in your growth. Never forget that bankruptcy is just a phase – and you’ll be fine. Featured Image Source: Generis Global Legal Services
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This article was first published on 13th September 2022

nnaemeka-emmanuel

Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.

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