Being involved in a failing business is stressful and concerning. Successfully running a business is a huge challenge, and even if you think you have done everything you can to make your business prosper, external factors can still leave you in hot waters. There are lots of things you can do to turn things around, so don’t panic and consider these top tips as you plan a suitable course of action.
Be proactive
Acting rashly will likely do more harm than good, but it is important to be proactive and consider realistic and sustainable ways to guide your business back to recovery as soon as you can. Think about areas that you could cut costs from like overheads. Why not seek out cheaper suppliers, collect and compare new quotes for your energy bills, and review unessential expenses? You might be surprised how much difference it could make if you can identify a few key savings and stick to these.
Work on your cash flow
Particularly if your business has grown quickly in a short space of time, you may have neglected to give your cash flow the time and effort it deserves. Poor cash flow management can initiate a real downward spiral for failing businesses, as late payments mean that cash resources for the rest of your business needs begin to dry up. Make sure that somebody within your business is dedicating time to sending out prompt invoices and chasing late payments. You could always consider asking businesses to pay for all or part of your services upfront to ensure a steady flow of cash.
Keep communicating
Hiding from your problems will only make matters worse. It can be tempting to try and cover up the extent of your current business failure, but all stakeholders will appreciate transparent communication from you where possible. Be honest with staff if it makes sense to do so and explain your position to creditors. Being chased or having a CCJ filed will only make matters worse, so tell creditors where you stand at the first available opportunity. If you can indicate when you can pay your debts, they may be satisfied or more willing to come to some kind of compromise that gives you time to recover your financial position.
Explore different rescue options
Some failing businesses find that their initial and proactive measures are not quite enough to address a long-term problem. You may find that you need to explore a more formal rescue option if your business is failing, such as administration. Entering into administration is a good option if you need some immediate relief from creditor pressure but believe that your business can be rescued. Alternatively, consider whether a Company Voluntary Agreement (CVA) might be suitable for your business. A CVA is a binding contract between your company and its creditors whereby you agree to repay debts over a specific time period.
Seek advice
Most importantly, don’t hesitate to seek advice from a business recovery expert if you are involved in a failing business. Business recovery experts, like the friendly team at Ballard Business Recovery, will help you to consider all of the different options available to you and advise on which is most suitable. Get in touch with the team today to begin understanding the best course of action based on your specific requirements.
