Starting a business from scratch is not easy, but starting a business after bankruptcy is much harder than that. It might make you feel afraid of getting out of your comfort zone, not to mention that your close ones will probably pressure you into giving up on your entrepreneurial dreams.
Luckily, it is not impossible. In fact, there are quite a few things that you can do to ensure that your business venture will be successful. Would you like to know what they are? In that case, you should definitely keep reading!
In this article, you will find a list of tips for starting a business after bankruptcy, including reconfiguring your budget, rebuilding your credit, checking the risk factors, being ready to tackle funding issues, and drafting a detailed business plan. Check it out!
Starting a business after bankruptcy requires financial resources. This is why you should reconfigure your budget and calculate how much money you will need, as well as where you will get that money from.
Apart from the usual startup expenses, such as legal fees, marketing, equipment, and training, you might have additional spendings, such as renting an office, paying off your debts, and hiring employees. Also, according to insurance experts from Anorak, if you choose to operate in one of the industry sectors with high bankruptcy rates, you might have to purchase additional insurance.
Fortunately, there are quite a few ways to reduce the costs and increase your chances of success. For example, you can purchase your equipment and furniture from second-hand stores, search for the cheapest office space, and limit your advertising costs.
Furthermore, make sure to draft a detailed budget and stick to it. Make sure to save some money for the future and do not spend all of your savings. Do not forget that your business will have ups and downs, so if you do not save some money for the worst case scenario, you might not be able to stick around for a long time.
If you want to get a loan from a financial institution in order to fund your business, having a bad credit score is definitely not going to be beneficial for you. Therefore, if your goal is to obtain a loan from a lending institution, you should focus on rebuilding your credit score. There are a few things that you can do in order to achieve this!
First of all, you can apply for a secured credit card. By using this card responsibly, you will be able to build your credit score gradually. If you are willing to pay off your balances on time and avoid incurring late payment fees, you will notice an improvement in your credit score in no time.
Another way in which you can rebuild your credit is by obtaining a business loan. Luckily, there are quite a few lenders who offer business loans specifically designed for people who have filed for bankruptcy. What is more, if you are willing to pay back the loan on time, you might even get approved for an unsecured line of credit.
Starting a business after bankruptcy is pretty risky. You might have finished paying off your debts, but there is a chance that making the same mistakes and using a risky business model will prevent you from achieving success.
In order to avoid such situations from happening, you will need to do your research and check out the risk factors associated with the business model you have chosen.
It is essential that you understand what types of frauds and scams are most common in this industry. In general, there are quite a few things that you can do in order to avoid being scammed, such as researching companies before working together and not giving out sensitive information unless absolutely necessary. Having these things in mind is essential to prevent frauds and scams from happening to your business.
One of the reasons why starting a business after bankruptcy is quite difficult is that most banks and investors are reluctant to lend money to someone who has filed for bankruptcy.
Fortunately, there are a few ways in which you can get your hands on the money you need. For example, you can get loans from your friends and family members. However, although this method allows people with bad credit scores to get some funding, it might not be enough.
The next option would be getting venture capital funding. However, this option is usually only available for businesses starting off with a concept that has already been proven to be effective and worthwhile.
Last but not least, there are a few investors out there who are willing to fund businesses started by entrepreneurs who have gone bankrupt in the past. One caveat applies here, though, as these potential investors might require collateral, meaning that you should have something valuable to offer.
For your business to succeed, you will need to have a detailed business plan in place. This plan should include everything necessary for the company to operate. For example, it should consist of an analysis of your target market, your marketing strategy, your sales strategy, your financial forecast, your management plan, and your exit strategy, among other things. On top of that, it must be updated on a regular basis. This way, you will always know what steps you need to take to achieve success.
Starting a business after bankruptcy is not easy. However, if you reconfigure your budget and draft a detailed business plan, you should be able to take the first steps on the road to success. If you are prepared to put a lot of effort into it, you still have a chance to succeed. Good luck!