What Can I do if My Business is Failing?
Running a business is not easy. Sometimes when cash flow gets tight, invoices are paid late, and new business is harder than ever to generate, directors may have a strong feeling that the business is simply failing.
In this article we’ll explore the common reasons for that and some potential solutions to fixing your failing business.
Signs that a Business is Failing
While not exhaustive, here are some of the typical symptoms of a business in jeopardy.
- 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
- Directors are unable to take proper salaries
- Declining Sales
- An Increase in Customer Complaints
- High Employee Turnover
How Can You Revive a Dying Business?
Before you think about specific strategies to turn your fortunes around, spend time evaluating some of the core factors which have contributed to the current situation.
Be completely honest with yourself about this. And try not to let pride get in the way of really understanding what has happened. If you’re going to do things differently, you’ll need to move emotion aside and work on practical ways to revive the business.
It’s also 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.
How Can a Failing Business be Rescued?
Turning around a struggling business is never easy. It is not impossible, however, if some of the following points are explored.
- 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.
Turning Around Your Failing Company
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,