Entrepreneurs, Business Owners and Bankruptcy – June 2017 Interview

Katherine:

Hello everyone. Thank you so much for joining us today on This Needs To Be Said. Our friend, Attorney Christine Kingston, has joined us once again. We’re going to talk about a slightly different conversation. This one is more geared towards entrepreneurs, business owners, and bankruptcy. I’ve been teaching you all that bankruptcy is not a bad word. So welcome back, Christine. How are you?

Christine:

Oh, Katherine, I’m doing fantastic. Good to hear your voice again.

Katherine:

Yeah, same here. It’s summertime and I’m loving it, absolutely. So, you have a topic for us on today as far as it would affect the market and entrepreneurs, business cycles, things that business owners will be concerned about, and not so seasoned business owners need to be concerned about, and how they can work through or work around some possible obstacles. So let’s talk about that. Of course, we’re going to get around to the conversation of bankruptcy, but talk to us a little bit about how what you bring today is going to affect entrepreneurs or could affect entrepreneurs, let me say it that way.

Christine:

Yeah, you know, it’s a little bit of a history lesson, too, Katherine. So, you know, what we can do is we always turn around and look backwards in order to see where we came from. Then we turn around and look forward to see where we want to go. What’s interesting to observe, and one of the things that I learned from a bankruptcy attorney that’s been practicing a lot longer than I have, is a little bit more about the business cycles.

Let’s take a step back in history to 2007, 2008, when the economy crashed, right? That was generally created because of the housing boom and the mortgages, that everybody got these fancy mortgage products back then. That’s kind of what really threw this whole crash in the first place. So the whole economy buckled under these fancy toxic mortgages that were being sold.

But, where are we now? We are in 2017, one of the longest bull run cycles in history. So you know what goes up always comes down. Gravity is there waiting for us. So when is it going to happen? So what I’m starting to see now are some articles coming in from … I read the economy articles from The Economist. I read about bankruptcy, and I keep an eye on those business cycles. What we’re seeing now is, and as we all know, is the economy’s kind of been sputtering along since 2008. We really haven’t made a lot of gains. So a lot of people are concerned by that.

Then some people are just concerned with what’s happening right now is we’re seeing a rise in credit card debt. When we start seeing a rise in credit card debt, some of the other articles I’m seeing is where the Feds are trying to tell the banks, “Hey, you all better put some money in reserves because the economy can’t hold much longer the way that it is.”

There’s a lot of predictions going on between the economists suggesting that anywhere between now and 2019, we should see an economic reset. What that means is housing prices will drop. People will end up in foreclosure. Bankruptcy filings will rise. We’ll start seeing some other issues coming up. Probably not as bad as 2008, but everybody needs to be prepared.

If your company is a retailer or you’re working for someone that’s a retailer, I’m seeing a lot more corporate bankruptcies, Chapter 11s. Retailers that sell clothing are going to start to fold under the pressure of the economy because they’re not making the money that they once were. The good news is, Katherine, is a lot of people have cash liquidity. But what’s going to happen when that cash runs out and they start putting money into the business to fund it when the business itself is not making the revenues that it normally would from sales? These are things that we want to keep an eye out.

That’s just more fun fodder that makes me good at the cocktail hours when I’m talking to people, but … You know, the business cycles are important for employees and employers to understand, so that they don’t get caught in the middle of a cycle when they’re trying to plan for their future.

Maybe now’s the time for us to kind of revamp if you’re sitting on a pile of credit card debt. Now is a good time to deal with it and maybe consider bankruptcy as an option so that you’re ready for the next up cycle. Maybe you need a couple of years so that you can buy a home or buy a car or maybe get out of debt so you can actually save for retirement because you haven’t been doing it for the last 10-15 years. I mean, these are all important factors for people to kind of give a different perspective, you know?

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Katherine:

It absolutely does. As you’re talking, I’m thinking of all of the retail stores that we’ve heard of closing so many stores across the country. I mean, as a consumer, you just hear, “Okay, they’re closing,” and the assumption is, “Okay, if they’re closing, somebody else is picking it up,” like they would assume … I won’t try to quote it, but I’ve heard that some stores, some major clothing stores, are closing and some people are saying, “Oh, this other company must be taking away all the revenue.”

We have an idea, as consumers, like cause and effect, if something is missing here, it must be going up somewhere else. You’re talking about the cycle. So we are looking, but we’re not as knowledgeable as you are, but we will be a little bit more knowledgeable after this interview. What that is, what’s really happening, that businesses are being affected, big and small, all around, and how to prepare yourself to get through that cycle, so that you can come back out on the other side, cause as you’re talking, I’m like, “Wow, you’re losing revenue. How do you stop the bleeding?”

On the other side of that is like well, this is for some industries, is inevitable to happen, so this is how you bounce back from it, is what I’m hearing you say more so than how to stop the bleeding. I don’t if that answer was in what you said and I missed it, but what I heard is how to bounce back from the situation of revenue loss. Do I understand? Was I following you right?

Christine:

Losing your job, it’s … Yeah, absolutely. You know, when you’re a business owner and you understand the economy’s going to retract a little bit, depending upon what kind of business you’re in, well, okay, you know obviously, mine might be recession proof or actually recession beneficial. Because, you know obviously, a bankruptcy lawyer loves a good recession. But, you know, there are some companies that are not necessarily recession proof. So if the economy starts to retract, your business may also retract if you are a business-to business type of owner, or a consumer, depending upon what you’re doing. So just give yourself, like you said, give yourself some room and some grace to understand that my business might be set back a little bit. So maybe I need to put more money in reserves so that my business will survive this next down cycle.

Alternatively, if you’re an employee and you’re working for a clothing store because you’re a millennial and that’s the only place you can get work maybe these days, and that company closes down, well, don’t take it personal, but you’re going to have to revamp yourself, figure out how to get back in the marketplace. If you know that your company’s going under or filing bankruptcy, jump as quick as you can to get onto the next job.

It reminds of a story a girlfriend of mine told … There’s a whole sector of our economy that kind of gets wiped up in these cycles. You know, for example, when the mortgage business started booming. A girlfriend of mine was making, I don’t know, $80-100,000 a year, working in Irvine, California. Then when the economy crashed, Irvine became a ghost town and all those mortgage lenders got laid off. They were all unemployed, most of them without a formal four year college education. What did she have to do? She had to go back and revamp herself. Now she’s a radiologic technician. Went back and got herself a little bit of an education so that she could now have more stable, steady career, rather than being caught up in the business cycles.

People want some long stable careers. They need to find something that’s not going to go with the wind of the economy, or those business cycles. Make sense?

Katherine:

It makes perfect sense. It takes understanding that … and it just takes the pain of away because you gave the business owners something. That’s how I started the conversation. But she also threw something in for the employees on how to prepare. Because it’s a very emotional thing to have to let people go, even if it’s for the company folding, or the employee needed to be let go. It’s an emotional thing of separation. But how do you prepare for these things? Wipe your tears, dust yourself off, and prepare. We need to be educated. We need to understand what’s happening out here in the world because it may affect our jobs if we are an employee.

You always bring a lot of good nuggets, but that, I was like, “Wow, yeah, as an employee, to be prepared.” I know a lot of people that are in a generation before me, that have stayed on jobs maybe … The generation before me, they stayed on the job for 30 years and retired. So they had that one job and that was it. But what would have happened to that generation before me, if they had to get laid off of a job? They were stuck, just like you just described.

So, our generation and the ones behind us, have that advantage of, if we pay attention, of being able to revamp ourselves to put out ourselves as a better product. And to treat ourselves, even if we’re not an official business owner, treat yourself as is the business of you, because you have to come out and market yourself again. For the students that are coming out of college that say, “I just want to do something for fun,” that maybe they get caught up in that. They get caught up in not having something that’s going to be marketable, and they have to go back to school again for something that’s going to sustain them.

This has been great as always. I want you to tell people, because the time is up, tell people how to get in touch with you outside of This Needs To Be Said.

Christine:

Absolutely, Katherine. I am in Orange County, California home based bankruptcy attorney, practicing only for consumers. I am a people person. I can be reached at 714-533-9210 or on the web at www.attorneychristine.com.

Katherine:

Thank you so much. Until next time, Christine, have a wonderful day.

Christine:

Katherine, always a pleasure, to you as well.

Katherine:

Thank you.

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