Avoiding Bankruptcy
September 24, 2012
THE effects of bankruptcy can be
devastating and far-reaching but
are there lessons we can learn to
avoid the stigma and financial
disaster? Absolutely!
Divorce
One of the quickest ways to
reduce your assets is to get
divorced. The court can instruct
that properties used as security
for bank funding be removed
leaving the business with no
funding lines. There is also the
impact on mental state, efficiency
and unwinding partnerships.
Stick to your knitting
How many times have you seen a
successful pharmacist buy a cafe
or restaurant? How romantic! I
can entertain all my friends. The
amount of good businesses that
go bankrupt supporting such
diversification is enormous.
Understand what you are doing,
or employ someone who does.
Pay your taxes
Fail to pay your taxes and watch
your pharmacy fail. The tax
department does not suffer fools
and ignorance is no defence.
Understand your position;
employ consultants from whom
you can get quality timely advice.
Over gearing
All businesses have a level of
affordable debt. Pharmacy
values are based on a Return on
Investment divided into the
EBITDA (Earnings before tax,
depreciation and amortisation).
So it is easier to find the debt
level a pharmacy can afford.
Gearing in excess of 80% can
mean the pharmacy will be under
cash flow pressure, especially if
your personal expenditure is
high!
Bankruptcy is a serious event so
take the time to learn from the
past and then you can enjoy the
future.
This week’s contributor
is Paul Rowe, Chief
Executive, Razor
Business Solutions.
The above article was sent to subscribers in Pharmacy Daily's issue from 24 Sep 12To see the full newsletter, see the embedded issue below or CLICK HERE to download Pharmacy Daily from 24 Sep 12
