6 Steps Resilient Entrepreneurs Take to Rebound From Bankruptcy
Bankruptcy is not ultimate failure, it is the clean slate you need to move forward.
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Bankruptcy has affected millions of Americans. As an entrepreneur, having personal or professional issues -- or even a failed venture -- that creates a situation where you are put into bankruptcy can be demoralizing, create emotional stress and overwhelm and dampen your entrepreneurial spirit.
But you don't have to let bankruptcy be the end of the entrepreneurial road for you.
Take serial entrepreneur Alex Charfen. After selling businesses at ages 16 and 21, running a consultancy for Fortune 500 and global 100 companies focused on opening new markets and authoring the ebook, The Entrepreneurial Personality Type, Charfen's next milestone wasn't one he wanted to put on a CV -- going bankrupt.
Charfen was extremely disheartened to find himself one of many whose real estate exploits put them into bankruptcy during the 2008 financial crisis, but he has bounced back. He recommends that you draw upon your entrepreneurial strengths, and use the following tips to put you back on the road to doing what you love.
1. Face it head on.
Charfen said the initial kick in the pants that got him back on the road to clean financial health -- and re-entry into entrepreneurship -- came via some straight talk from a friend.
"He told me to look at things differently," Charfen said. "He said, "You had lots of choices. You could have chosen to ignore your bankruptcy and racked up more debt. You could have chosen to run away to Mexico or Europe. You could have chosen to become a shut-in and isolate from the world. Instead, you decided to face bankruptcy head on. Now own it and move forward.'"
Just as entrepreneurs have to pivot as new initiatives don't pan out, do the same with your financial situation.
Related: 5 Ways to Recover from Startup Failure
2. Take a financial inventory.
Charfen believes it is absolutely vital that you begin to look at your situation in the most realistic terms. Where exactly do you stand financially? How much money have you lost? How much do you owe? This helps you to clarify where you stand today, and start to limit your overwhelm.
3. Budget to move forward.
No business thrives without a plan, so do the same here. Charfen says to create a budget with the bare minimum amount of money it will take you to survive, and stick to it religiously. Calculate your net worth, and begin the process of tracking your way out of the problem.
Charfen explains, "When Cadey and I went bankrupt, we sat down and cut our monthly budget from $22,000 to $3,500, and forced ourselves to live on it for one year -- no matter how much money we were able to make in that time. We created 30-day, 90-day and year-long financial goals and targets. Then we worked each day to move toward them."
Related: Business on a Budget: 5 Money Saving Tips For Every Startup Entrepreneur
4. Be transparent.
Charfen also advocates that you don't hide your problems. Find protection and support through your friends and family -- or those who won't judge you. Bankruptcy is a fact of life for millions, and it's not something you should be ashamed of or try to cover up. Ask for help when you need it, and communicate transparently about your situation to those around you.
5. Intense focus.
Great entrepreneurs stay focused on their goals. Do the same with your bankruptcy. Get rid of everything in your life that's distracting your focus. "Cancel your memberships to professional organizations or your commitments to volunteer, even if just temporarily," Charfen said. "Beyond this, be wary of relationships in your life that aren't supportive and don't move you forward. Bankruptcy requires a different lifestyle. Cadey and I adjusted our expectations for the house we wanted to live in and the cars we wanted to drive. We canceled newspaper and magazine subscriptions, got rid of cable and stopped eating out. We made our life as simple as possible so that we could focus on the only thing that mattered -- bouncing back."
Related: The 6 Main Reasons Businesses Fail and How to Avoid Each
6. Engage again.
Charfen's last point may be the most critical. "If you're facing bankruptcy, you're not a failure," he says. "You've lost in only one metric -- money. Your drive, creativity, determination and past successes are all still intact. Although publicly declaring bankruptcy is one of the most humiliating moments for entrepreneurs, it can also be an amazing opportunity for rebirth.
Remember, while it's nothing to strive for, bankruptcy gives you the opportunity very few people have -- a clean slate. Although it's a big mountain to climb, sometimes being at the bottom can be the best place for entrepreneurs to find momentum.
Using these same roadmaps, Charfen and his wife were able to rebuild their fortune and rebound as entrepreneurs in a big way. Entrepreneurship is a journey, with highs and lows. If you find yourself in a low, like bankruptcy, just think and act on your entrepreneurial instincts to turn it around.