Ya gotta love the Wall Stree Journal. They had a big article on March 26th on the high cost of saving a failing business, by putting it into Chapter 11, which might have amazed some, and scared some with the high costs.
I checked with one of my clients who went BK three years ago, and the initial journey cost him about $50k, but he continues to spend about $50 k a year on added record keeping and the added costs of high-rate loan that he took out to keep going (we’re trying to help him get in refi-d. But, he’s alive and prospering, which is the whole idea of Chapter 11 in the first place.
A couple of things jump out at me:
1. The major culprit in the WSJ’s article seems to be–you guessed it–the lawyers and outrageous fees, both up front and continueing. My client spent about $1500 as a retainer for his BK (we’re in AZ, things are cheap), and we strategize on how to keep stuff out of a lawyer’s hands. He spends $500 a month, as opposed to several times that much with lawyers doing their thing.
2. Clearly, if BK is in the cards, get a mentor to work with you on the perils and pitfalls; we’re available on our 800 #, 716-9626, and via Skype, at johnheinrichtwo. We’ve been doing some telemarketing of our new service, CEO to Go, www. ceotogo.info, and one of the more bizzare things we’ve discovered is that 50% or so of the companies that could have used us have failed in the past 3 years.
3. Cities and counties charging property taxes on your property can be your friends, because their collection efforts are poor. and they seldom follow up.
4. Normally, your longtime suppliers will work with you if you confide in them that a BK is in the cards. This can free up working capital.
5. Really take a look at your sales effort….could it be better? Sure it could, and we can help.
These are just some of the ideas out there. The point is, don’t throw your hands up and quit on your business that you’ve lovingly built.