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A stiff upper lip won’t fix your business finances
Starting a business is tough, keeping it going is tougher still. Of all the challenges a business might face, it seems stubbornness by those in leadership positions might be amongst the most damaging.
It can be hard to admit that you’re struggling and really easy to decide that you’ll just give it another week, another month, or another quarter to see if business improves.
You see, there’s a perceived stigma with failure. There’s a certain pride that prevents us from seeking help, even when we need it. There’s an implication of shame for admitting that a situation is spiralling out of control and is too big for us to handle alone. While the courage to continue is laudable, the attitude that prevents us from seeking help when it’s clear we need it simply must change.
“We believe that a change in attitudes is critical in order to successfully avoid substantially increased corporate insolvencies – confronting business issues, rather than being ashamed of them. Seeking the early help of restructuring and insolvency practitioners enables a review of business processes or management to salvage many businesses, bringing them back into profit.”- Bob Pinder – Insolvency Director at The Institute of Chartered Accountants in England and Wales (ICAEW)
What are the fears preventing companies seeking help?
The ICAEW conducted a survey of Insolvency Practitioners in an attempt to ascertain why company bosses didn’t seek help when things started deteriorating. There were three primary factors;
- Fear that the company leaders would lose control of their business and the outcome of the process
- The companies weren’t aware of the options available and what an Insolvency Practitioner can do to help
- There was genuine fear of the impact their company’s failure could have on their families and lifestyle.
How do you recognise that your business needs help?
There are several distinct stages a business can go through when growth starts to falter. Companies keeping an eye on their own performance are likely to have spotted a crisis looming long before it happens. If action isn’t taken, or if help isn’t sought, that crisis will hit surely enough. From there, the management of the crisis will be the difference between the business becoming insolvent or being able to stabilise and return to growth. The earlier assistance is sought, the more likely the business is to fully recover.
A particular red flag to watch for is the reliance on late payments to creditors in order to retain a degree of liquidity. It shouldn’t be the case, but for many, HMRC is the first creditor to be asked to shoulder the burden of a company in difficulty in the form of late payments for VAT and PAYE. This because HMRC become a creditor of a business whether they want to or not.
Eschew the stigma and seek assistance sooner
An Insolvency Practitioner like Lines Henry isn’t just for when your business becomes insolvent. We’re experts on all aspects of Insolvency, which naturally includes what causes it and how to prevent it along with what to do once it happens.
Leave the stiff upper lip to the plucky protagonists who faced their doom head on. Instead be a real hero, to your staff, to your family, to your customers and to your suppliers, by having the wisdom to spot when you need help, by seeking it early, and, by so doing keeping your business trading. Speak to us. We can help.