Businesses Which Have Made It This Far Through The Recession Still Require Debt Workout

The recession from a small business owner’s point of view is now three years along, starting in 2008 and continuing now. Unfortunately, it will continue well into the future with more serious dips to come.

In the first few years the weakest small businesses were quickly wiped out, the early victims. Millions closed their doors, filed for bankruptcy or were foreclosed on and liquidated by the banks.

Those that remain in business now were either financially strong enough to continue losing money or they downsized adequately to stem the losses, reinventing themselves to meet the demands of the new market. These were the strongest businesses with business owners who had the insight and vision to see what needed to be done and to do it.

Now what? Is that it? Are all the survivors fit to go? Ready to excel? Secure in their future? NO, not by a long shot! Absolutely not, the job is not yet done. The reality is that the debt these owners took on before the recession is still greater than what they can afford even if they have managed to figure out how to support it.

The debt you took on when you were experiencing far greater revenues is not the debt your business is worth or can really support now. It is the noose around your neck, the ball and chain holding you back and will ultimately be your demise. Even if you have modified it or simply figured out how to support it, it is way too high in relationship to your revenue and your business is probably not worth the amount of debt you are carrying anyway. Even if you have managed to support the debt service, what’s the point?

In short, you will eventually gag on the debt service, especially since we are likely to experience more downward turning pressure. And, you can never sell your business as there is no equity and there will never be any. The business is simply not worth the debt you are carrying. There is no reason to stay invested, you are working for the debt.

You must do the debt workout as this is a fruitless trip you are on. You have merely postponed the inevitable, managing to survive but not emerge. You must do the debt workout.