Starting a bar or a restaurant is notoriously hard. Some estimates claim that about 80% of all restaurants go under in the first five years. It’s even 60% in the first year. If you’re an owner who made it through a single year without folding, you’re already running an above-average business.
Why does this happen? There are a lot of potential reasons, such as:
- There is too much competition in the area and not enough people to support all of the options.
- The food is priced higher than people in the area can afford.
- The location is not good and people simply don’t come to the restaurant, even if it offers a terrific meal at a great price.
- The costs of keeping the restaurant in business are simply too high and prove unsustainable.
- The debt it took to start the business is too much and can’t be paid back with how much the business is bringing in.
These are just a handful of examples, and it’s clear from the high failure rate that there are plenty more. So what should you do if you’re an owner who feels like his or her business is on the brink of folding? What options do you have?
Could bankruptcy help with your debt?
It all depends on the reason your company has run into trouble, of course, but bankruptcy may be a viable solution.
Take the final option noted above, for instance, where the debt load is too high. This doesn’t mean you’re not making any money. You are. The business works. It’s profitable. You’re just not making enough to pay that debt. This is when using bankruptcy may also you to restructure or spread your debt out into a different type of repayment plan that is affordable. You don’t need to change the business. You just need to change the debt.
Above all else, be sure you know what options you have. This is a tough industry, but there are many things you can do to work toward the success you seek.