Starting up a business can be a thrilling challenge at the outset and a satisfying pursuit under any circumstance. However, once the novelty of doing it for yourself wears off, real world problems can quickly start to squeeze the life out of any fledgling business.
So, what should you do if your company is facing up to a financial crisis? Here are six steps you can take to improve your company’s prospects.
1 – Take a step back
As an entrepreneur or business boss in any situation it can be extremely tough to separate yourself from the day-to-day machinations of your organisation. This is perfectly natural and understandable but if you really want to give yourself the best chance of turning around a bad situation, you need to take a step back and gain a broader perspective on what’s going wrong.
2 – Consider your restructuring options
If your company is really facing a dire scenario and the prospect of going out of business is becoming all-too real then you should be looking carefully at how restructuring options might help. It could be that some very tough decisions will need to be a made but survival in some form is generally preferable to being wound up altogether.
3 – Liquidate unneeded assets
Turning around a business facing insolvency generally requires a clear focus on determining which aspects of a particular operation are essential and which are expendable. Those that fall into the latter category should be liquidated as soon as possible in order that funds might be raised and cash flows improved.
4 – End non-essential relationships
Letting go of dedicated members of a workforce will generally be the toughest aspect of implementing a turnaround plan but it often has to be done in order to give a struggling company a chance to survive and recover. Here again the issue is deciding whose contributions to your business are truly essential and making decisions on that basis. This applies to contracted suppliers as well as to any full or part time employees.
5 – Assess your financing options
However dire your company’s financial situation might seem, there remains a good chance that you can raise funds and reinvest for the future. Accessing finance under these circumstances might not be easy but there are a growing number and variety of alternative finance providers around that specialise in niche areas and helping troubled companies avoid disaster.
6 – Investigate your repurchasing options
If your company reaches the point at which it looks very likely that creditors will continue to pursue their debts then directors can sometimes acquire certain assets belonging to the business. It is important to tread carefully and get solid advice from experts in these areas but it is possible for company directors to retrieve assets from their failing companies with a view to re-establishing a similar operation further down the line.
Seeing a company you’ve fought hard to create and develop fail can be heart-breaking for entrepreneurs but it is, unfortunately, a not uncommon outcome. Business bosses can help themselves to make the best of these testing situations though by following the above steps, getting good advice from the right parties and generally keeping a cool head as matters unfold.
Mark Halstead joined the Begbies Traynor Group at the creation of Red Flag Alert and is now in his 10th year with the business. Having worked at companies across the financial services industry, he is now a fellow of the Institute of Sales and Marketing and an expert in a variety of fields.