Running a small business is not easy. 20% of businesses fail in their 1st year, while about 50% fail by year 5.
Against such daunting statistics it’s a wonder anyone starts a business at all. If you understand the challenges, however, you’re well on the way to surmounting them.
Reaching the conclusion that your small business is failing is devastating. We know that small business owners put their heart and soul into their business and often risk everything to build it.
All hope is not lost though. Getting good, experienced, specialist advice can often avoid ultimate failure of a business and achieve turnaround. Please do contact us to find out how we can help.
Reasons for Business Failure
While not exhaustive, here are some of the typical reasons for getting to the point where a business may fail :
- You cannot pay invoices when they fall due
- Your own customers often pay late, stretching cash flow
- Banks are refusing you finance and/or you’re close to your overdraft limit
- Declining Sales
- High Employee Turnover
Advice for a Business Which is Failing
We have many years experience in advising small business clients who are reaching the point of, and risks associated with, possible business failure. We’d be happy to talk to you so please do get in contact but a few pointers, from experience, where you may help yourself include :
It’s important to remind yourself why you started the business in the first place. Somewhere along the line that passion may have been lost under the hectic workflow of staying afloat.
There is no magic trick to reviving a business. But you need to be clear on your USP, know your audience, budget efficiently, and run a very tight ship. You also need to accept when the situation has gone beyond the point of no return without professional advice.
How to Avoid Business Failure Becoming Insolvency
Turning around a struggling business is never easy. It is not impossible, however, if correct actions are implemented with good advice. Things to consider include:
- Ensure you have total visibility of your company’s finances -and your accountant is giving you accurate, current information.
- Does the business model remain sound? Are competitors leaping ahead of you with stronger USPs?
- Are you offering your customers the best value proposition? How could you do this better?
- Be ruthless when it comes to cutting costs
- If you’ve lost control, take it back.
- Are employees and customers behind you? To survive, they have to be with you 100%
- Don’t fear change – If the business has reached a place where you are questioning its survival, serious change is necessary.
What Happens if a Business Fails?
No one wants to see businesses go insolvent unnecessarily. As such there are a number of options available both through HMRC, and via insolvency practitioners such as ourselves.They include the following:
Time to Pay Arrangement – This is where HMRC agrees a structured repayment plan, usually over 12 months, to help you pay your tax bill. Find out more.
Company Voluntary Arrangement – Where you cannot pay creditors, the CVA mechanism is a formal payment plan, arranged by an insolvency practitioner, so you can pay creditors at a rate you can afford.
Going into Administration – For larger companies, going into administration offers a moratorium from legal action which an insolvency practitioner can attempt to turn the business around through restructuring to avoid liquidation.
Finance / Invoice Finance – Alternative finance has never been easier to obtain. Many businesses, and especially those who cash-flow cycle is hampered by late payment of invoices, find that invoice finance offers a convenient solution,