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Common missteps that put businesses at risk of bankruptcy

For many Virginia businesses, one of the most common concerns is being able to maintain financial security and make strategic decisions that will keep the books in working order. Even the simplest of mistakes can result in detrimental consequences, including bankruptcy, that could end up putting an organization in financial ruin. When this happens, the result is usually that the suffering company has no other option but to close its doors. 

In what seems like a common theme in recent months, CNN reported yet another company that has filed for bankruptcy. Claire's, the popular jewelry store found in many malls throughout the nation, announced that it was filing for bankruptcy protection. As of the end of 2017, Claire's had an alarming $2.1 billion in debt. While a restructuring agreement is in place, the future of the once-popular chain giant is currently unknown. 

According to Chron, there are a few common reasons why companies could find themselves in hot water and seeking bankruptcy protection. These include the following:

  • Inefficient response to fluctuating market conditions.
  • Careless decision making in regards to important financial decisions. 
  • Inadequate financing or bad credit that taints the company's image and makes creditors wary of providing assistance.
  • Poor location or advertising.
  • The resignation or loss of important employees.

When a company recognizes that they are endangered, it is imperative that they immediately reassess their operations and make necessary changes. Often, a thorough reorganization of company operations can create a glimmer of hope and an opportunity for the company to get back on track.  

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