Don't rush into bankruptcy if your business debts are starting to rack up. Even if it looks like you will never be profitable, don't throw in the towel yet.
1. The Temptation To Quit Will Be Greatest Right Before You Suceed
If youve been bending over backwards trying to make your business work, then you haven't failed. You haven't really failed until you give up. Ironically, many businesses innovations come during periods of tension.
2. Don't End Up Being The Captain That Goes Down with His Ship
Unless you have unlimited liability, such as a sole proprietership that is unincorporated, don't worry. Even if your business fails horribly, customers can't delve into your own personal belongings to pay for debts owed. The exception here is a partnership, and this is why some Enron employees that were completely not related to the fiasco ended up losing everything - they were legally a partner in the business.
3. Don't Let The World Know
No, it's not dishonest. Informing each and every customer about why your business isn't doing as well as it used to is a bad idea. They will immediately run, or think of running. Try to make it look like everything is fine - business as usual.
4. What To Do When Creditors Come After You
If you have creditors knocking at your door, chances are youve let things fall for quite some time. You might want to voluntariliy put yourself into an agreement with them before you declare bankruptcy. You can negotiate your debts down to a lower level using bankruptcy as a threat to them - after all, if you go bankrupt, they get nothing.
5. This Is Your Last Resort
Bankruptcy is a lot like suicide - it's the absolute last resort. Having had a bankrupt company stays with you for a long time in everything you do - your credit rating, your employment history, and even just in the way you think of yourself day-to-day. It's better to have everything wrestled from your hands than to give it up without a fight.