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What should I do if my business can't make enough to pay loans and bills?

Los Angeles, CA |

I am in my first year of running my business but its not generating enough revenues to pay loans and bills. What can I do?


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Attorney answers 3


Unless you're contemplating bankruptcy, this is probably not really a legal question, but rather a business issue. Most new start-up businesses take 3 years before turning a profit. I'm not sure what type of business you have (specific industry?), the business structure (corporation, LLC, sole proprietorship), how much capital you've invested, or what business plan (if any) you've implemented. These are all factors which go into business planning.

Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult with your own attorney.


There are initiallly three things you should do: (1) get involved in a business development program like the California Business Development Incubator or some of the other low cost business development services; (2) hire a business development attorney who focuses on transactional law not litigation and (3) have that attorney immediately contact your creditors and strategic alliances to set up a plan that will move you to a more peaceful situation.

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You should reassess your business and find out why you are not generating enough revenue and whether or not you can do anything differently. Once you have figured out whether you have a viable business if it you need to negotiate better terms with your vendors or delay your payment obligation to them a business and/or bankruptcy attorney may be able to assist you. Sometimes a business consultant can help you, for example, if you are in a manufacturing business with a healthy profit margin and need to pay your vendors in 7 days but then have to wait 45-60 days to collect from your customers, your problem is that of cash flow which can be resolved by using a "factor", rather than a bad business model.

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