Bankruptcy isn’t fun — failure never is. Bankruptcy should always be a last resort, but it isn’t the permanent blemish many assume. Bankruptcy, though painful, offers perspective: The thrill of victory is enjoyable only when you have something visceral to compare it to. Furthermore, living your life by what’s determined by three private data houses, which exist not for your benefit but for their corporate subscribers, is a faulty paradigm.
People who are essentially bankrupt frequently shun filing to avoid shame and fear. I filed for bankruptcy in 2008; while I didn’t set out to have a business partnership become destructive and vulnerable to market changes, I was responsible for making the choices that ultimately ended our venture. Nobody plans to get injured or go bankrupt, but once you find yourself there, the only attitude that works is one that propels you toward making the right choices. You have to learn from the past, rather than live there.
How to rebound
As I started again after bankruptcy, I didn’t waste energy on strategies that required credit history. A great credit score isn’t necessary to develop a solution for the marketplace. The best thing about building a business when you have limited capital is finding a new level of creativity in your mind; you become more aware of what your customers value.
To build a business from the ground up without capital or credit, you have to focus on what needs you can fill today. As profit comes in from that, you allocate the profits to expanding the offering — you literally bootstrap your way forward. Once something shows promise and the ability to scale into high demand, capital will follow, and nobody will ask for your credit score — it’s irrelevant to the fact that you have a solution people want.
Bankruptcy improved my relationships with not only my spouse, but also vendors. It helped me face the music and make things right by asking each how I could make it up. Surprisingly, many told me to just do something better next time. I was humbled, and became a more responsible and empathetic businessman. I was grateful to start at “zero,” rather than below ground level.
Make the call
My first business, founded in 2000, never was revenue-positive; by 2003, I was over $500K in debt. I never filed — or even considered it — and spent two years working non-stop, doing office work during the night and serving as a ditch digger by day. I paid everything off in 2005; it was the right thing to do in that circumstance. In 2008, it wasn’t.
Some people have a lax work ethic and will file when they should be digging ditches. Others will resist filing when it’s inevitable. If a person hasn’t taken responsibility for what brought him to this point, or hasn’t forgiven himself for making bad decisions, that’s the starting point.
You can’t win if you don’t know how to lose with class. Emerging from bankruptcy is your opportunity to redefine your life and what it means for you to win.
Chris J. Snook
, managing partner of Carlsbad, Calif.-based
TLEC Ventures, has spent the last five years in the investment community incubating media start-ups.