TooJay’s Deli Files for Bankruptcy
South Florida-based TooJay’s deli files for Chapter 11 bankruptcy; is this just the first of what is going to be a tsunami of bankruptcy filings to come? Will your company or employer be added to the list? No one ever wants to declare bankruptcy but it happens.
If you are a business owner, how do you stop your company from being added to the list of those filing for bankruptcy? Now is the time to start thinking about how you can reduce your expenses and preserve your cash so that you can survive the upcoming hard times. Survival almost always means being quick to adapt and keeping your eyes on two important things: your CASH and your Accounts Receivable.
Cash is the fuel required to keep your doors open, pay your employees, rent, and operating expenses. While accounts receivable is nothing more than future cashflow that is at risk.
At risk means that it’s something someone else can destroy – if you don’t control it. Make your credit policy too tight and you will lose sales and growth, but make it too loose and you end up with sales that you never collect payment on. Uncollected sales mean not only do you lose the cash you can’t collect, you also lose the cash expended to make the sale and the cash expended to purchase the goods sold.
Customers that have been good payers for years could be running into trouble through no fault of their own. The important thing is to prevent their trouble from becoming your trouble.
What can you do? Review the list of customers you extend credit too. Reevaluate their ability to meet their commitments, watch the balances of credit accounts, and be sure to cut them off early, as soon as they become delinquent. Keep in touch with those that owe you money and remember getting something now beats getting nothing later. When possible offer alternative payment terms, like payment by credit card.
Preserve your cash. Review expenses to see what recurring expenses can be eliminated. Check your credit card bills for services that automatically bill each month and are no longer used. Reduce the number of telephone lines, and eliminate services you don’t need like cable TV, window cleaners and other services that lower sales mean you can do in house.
Make a plan to protect your assets so that should things go down hill you are not left with nothing to show for many years of hard work. Talk to your accountant and your attorney about how to best protect your personal assets, and remember a business is not a ship, and in business the Capitan does not have to go down with the business. Be sure to save a spot on the lifeboat so if necessary you have the resources to start over.