Small Business Bankruptcy: Failure or Reset?
Researchers from Brigham Young, Harvard, University of Chicago and University of Toronto, partnered with SCORE to survey small business owners’ attitudes toward bankruptcy, and awareness of bankruptcy as a potential tool.
In general, small business owners are unaware of bankruptcy options and protections
Small business owners were asked if they have “a good understanding of the bankruptcy system:”
- 10% strongly agree.
- 24% somewhat agree.
- 21% neither agree, nor disagreed.
- 20% somewhat disagreed.
- 24% strongly disagreed.
There is a negative stigma related to bankruptcy:
- 65% of small business owners agree that it is embarrassing for a business owner to file for bankruptcy.
- 60% of small business owners agree that friends and family may look down on a business owner who files for bankruptcy.
- 58% of small business owners agree that employees will be less willing to work for a business that filed for bankruptcy.
- 54% of small business owners agree that clients will be less willing to buy from a business owner who filed for bankruptcy.
When shown educational videos about bankruptcy opinions generally changed:
- 74% of small business owners who watched the educational video were able to correctly answer questions about bankruptcy options and benefits; in comparison to 40% of those who received no additional information.
- 25% of small business owners who watched the educational video disagreed with negative stigma around bankruptcy, in comparison to 17% who received no additional information.