Time to Fold? Here's a Primer

By Tamara Monosoff of Entrepreneur.com



If you've taken your invention through the entire process of design production and to market, you've overcome many high hurdles. It probably never occurred to you that once your product hits stores, there could be insurmountable challenges, particularly if you face bankruptcy.

It's important for you to have the facts, because the odds of failing are even higher than the typical economic environment's odds of most businesses failing within five years.

There's a stigma surrounding bankruptcy that you need to overcome. Given that we spend most of our personal and professional lives trying to look good, and glorifying those who succeed against all odds, deciding to abandon the fight and openly acknowledge failure is something many of us find hard to do.

One positive outcome of today's economic situation is that it's now obvious that failure is a business risk. Everyone from the savviest investment banker to once-hot companies to major public corporations is failing. If you've failed (or are about to), you're in very good company. Let go of any shame and get the facts you need to make good decisions going forward.

There are two main categories of bankruptcy: business and personal. For many small business owners, these lines are somewhat blurred because it's difficult to separate personal finances from business finances. From a bankruptcy perspective, this can be a positive.

First, however, I need to address one caveat: I'm not an attorney, I don't give legal advice, and this is a very general description. Second, bankruptcy laws and the income level -- "means" -- that can impact eligibility for certain forms vary by geography. Therefore, I recommend seeking the advice of an attorney when considering bankruptcy.