Small Business bankruptcy
May 19, 2010
The consequences of small business failure are usually bankruptcy. The sad part of this is that bankruptcy is usually avoidable and most failures are due to poor management training skills and a lack of understanding of the fundamentals of setting up a small business.
Defining Small Business Failure
The definition of small business failure is when a business:
- declares bankruptcy because it can no longer meet its financial commitments, or
- closes down because it is insolvent and cannot trade profitably.
Closing a business for medical and personal reasons is not considered business failure as long as it is not associated with financial problems.
What are the Consequences of Small Business Failure?
Not all small business failures end up in bankruptcy. Many negotiate deals with their creditors, e.g. 80 cents in the dollar. Then the company and, in some cases personal, assets are sold off to cover the company
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