Bankruptcy is a legal status of a person or other entity that cannot repay the debts it owed to creditors. In most jurisdictions, bankruptcy is imposed by court order, often initiated by the debtor.
Everyone who runs a business has thought about it at one point, but don’t believe that only business people can become bankrupt. Bankruptcy has nothing to do with a business. If you owe someone money and you can’t or won’t pay it back, that someone can go to court.
The court can then decide what to do, and in the worst-case scenario declare you bankrupt. Related to businesses, this process is called insolvency and usually ends with the liquidation of the company. If you are personally liable for the depth of the company, this can end in you being declared as bankrupt.
If we are looking at the numbers of bankruptcies/Insolvencies throughout Europe, we can see that this is not a rare occurrence. Have a look at this data here and make your mind up http://www.tradingeconomics.com/country-list/bankruptcies
There are thousands of bankruptcies in Europe alone every month. These numbers are so staggering; it takes your breath away. On the other hand, if you are in this situation, you’re certainly not alone. Each country has its way of dealing with these things, and you should check the conditions in your own country for more details.
The most important thing is that you are up-to-date with the proceedings in your country and that you seek as much help as you can get. Don’t just sit there and let it happen. In many countries, it might be an advantage to declare yourself bankrupt before the court decides, but check this with your accountant and local authorities.
If at first you don’t succeed…
So now it happened. You couldn’t pay your bills; the bailiffs just left your building with pretty much everything besides your bed, some chairs and a table. What are you going to do now?
In my line of business, I come across people in these situations all the time, and for almost all of them, the embarrassment of it all is the worst thing they have to deal with. Some blame themselves; some blame the system or others.
Everyone has his way to deal with such a situation. But for all of them, life goes on, and as hard as it might be for some, it is crucial to pick yourself up and get a move on – especially if the family is involved.
For many, the reason they are in that situation is not based on them doing something wrong, but often is the result of circumstances or fraud by other parties. Also taking a risk is part of running a business, and yes, sometimes it doesn’t work out. There is nothing wrong with this.
Do it again – but differently
Being an entrepreneur is about taking risks. I’ve met some amazing people with incredible skills and talents who went through this process. Listening to their stories, I can find the mistakes they’ve made, but I can also understand why they made them. I probably would have done the same.
If you are in that situation, it is going to be challenging to find a job, because companies don’t like to deal with these things. It will even be harder to impossible to start another business because in most countries you’ll be banned from running a company for several years. So what can you do?
The first thing to do is to be clear about your situation. You need to know what you’re allowed to do and what not. The next thing is to look at your options. Whatever period the bankruptcy takes, you want to prepare yourself to get your life back. This could be a great time to learn new skills, to practice and investigate your possible future market.
Start planning for the future – now
It’s vitally important to think ahead. It doesn’t matter how difficult this might feel right now. You’ll have to look forward, be an entrepreneur and look at your options. If you can’t see anything, speak to people who can help, go to meet-ups – and just get out there.
You’ve done your best. It didn’t work, but you’re preparing for the next run. This is something to look forward to. If other people, like partner and children, are involved, speak openly about it. Identify where it went wrong and learn from it.
This can be hard to do on your own. If you struggle a lot, go and work for a charity and help others in stressful situations. It brings back the perspective of where you stand on a larger scale. And if they can smile, you certainly can.
The one thing you want to do is learn from it. This doesn’t mean never to take any risks again. Many founders of amazing companies went through the same process and look where they are today. Just google “CEO’s who went bankrupt”, and you will see you’re in good company.
That leaves me with one question: What’s your future life going to be like?