For many businesses in Escondido, there will come a time when a major change needs to be made in order to sustain the viability of the company. In some cases, the change will be in marketing - reaching different customers by using different ideas. For others, the change may be in what the business sells, perhaps to adapt to evolving customer preferences. But, in the most serious circumstances, the changes may address creditor issues by pursuing debt relief with a Chapter 11 bankruptcy filing.
For some residents in California, dealing with minor financial challenges is common; however, these are often easily overcome with proper budgeting or adding another job to his or her life. When a small business owner deals with financial problems, this is frequently owed to business debts, personal debts or both. Depending on the severity of the situation, some circumstances require a business owner take more serious steps, such as filing for bankruptcy.
A recent post here discussed the Chapter 11 bankruptcy filing being pursued by California-based clothing retailer Pacific Sunwear. Now, reports indicate that yet another clothing retailer geared toward the tastes of teens and young adults is making a similar move in a bankruptcy filing.
Several previous posts here have mentioned how important it is for businesses to be able to adapt to the times and adjust to the changing tastes and habits of their consumers. Those companies that do not make the correct adjustments may face declining profits, rising debt and stagnant sales. And, as a result, companies in that position may contemplate a bankruptcy filing in an attempt to right the ship.
Our Escondido readers may have seen previous posts here that discuss the ever-present need for businesses in today's economy to adapt to changing customer preferences and behaviors. There have been plenty of companies that have cited the changing dynamics of the economy when filing for Chapter 11 bankruptcy. The Internet, of course, is a significant catalyst for change in today's retail sales market.
Escondido readers may be familiar with the quasi-taxi cab style companies Uber and Lyft. These services, fast on the rise in California and throughout the country, are especially popular with people who live in urban locations, as well as those who know how to quickly and easily use technology. But, as many business people in California know, the rise of a new type of service can quickly lead to the end of another.
Many companies find it necessary to file for Chapter 11 bankruptcy in order to address debt concerns and reorganize the company's structure with an eye toward returning to profitability. However, not all companies do so when they are connected to a former investor who has quickly become the number one target for federal authorities investigating securities and fraud schemes.
For some companies that go through the Chapter 11 bankruptcy process, it is the only time when the company really needs to focus on an overhaul, change a business model and get back to the business of profitability. For others, however, going through Chapter 11 bankruptcy is no guarantee of turning things around.
In Part I of this two-part series, we began to take a look at some of the important factors that need to be considered before a business bankruptcy is filed. Here, in Part II, we will continue to examine some of the important questions business leaders need to ask themselves before deciding to go through with a bankruptcy filing.
Any company that begins to seriously consider the prospect of filing a business bankruptcy will likely encounter one undeniable truth: there are a wide variety of factors to consider before actually taking the plunge. With both Chapter 7 and Chapter 11 bankruptcy as potential options for companies that are experiencing significant financial problems, the decisions that will need to be made could alter the course of history for any given company. Here, in Part I of a two-part series, we will begin to take a look at some of the factors that companies need to consider before deciding whether to pursue a business bankruptcy filing.