Being at the helm of a company facing a financial crisis is not a position that any business boss would want to find themselves in. The challenge can be extremely testing but the decisions taken by directors during these tough times can go a long way to deciding what a struggling company's eventual fate will be.
Here's a look at some action points that can help turn around a company that's been brought to the brink of failure and insolvency.
1 – Step above the fray
For a business leader whose company is facing serious financial difficulties and creditor pressures, doing less can often be more beneficial than doing more, at least if it means a director is able as a result to take a broader view on what their company's issues really are. In short, doing more of the same and hoping for the best is unlikely to succeed and directors need to take whatever time they need to think strategically about what changes they might make for the better.
2 – Sell off non-essential assets
When insolvency is a realistic prospect for a company, its non-essential assets should be sold to raise money and to keep that prospect at bay for as long as possible while more over-arching solutions are sought. Taking these steps can be difficult for any number of reasons but liquidating assets that aren't integral to the running of the business buys directors time that can be absolutely inviable in these situations.
3 – Make redundancies where necessary
Making redundancies and ending long-established relationships with suppliers can be extremely tough for company directors but they can be unavoidable and absolutely necessary. The imperative for company directors is to maximise the potential for their operation to stay in business and it is an unfortunate reality that cutting jobs can often help improve the scope for sustainability of a struggling business.
4 – Investigate all financing avenues
There are an increasing array of financial solutions available designed with the needs of companies facing insolvency in mind. These rescue options are often tailored towards operators within specific industries and they can save businesses from disaster in broad variety of different scenarios. What's crucial from a director's perspective is to ensure that no stone is left unturned when it comes to pursuing potential financing options that could make a crucial difference during difficult times.
5 – Get advice from established experts
Company directors carry a lot of responsibility at all times but that burden can be particularly tough to bear when the future of a company is on the line. Speaking to experts on the details of insolvency, corporate administration and financial rescue, can help offer important clarity on key issues to directors in need of third-party guidance and impartial support.
Unfortunately, the truth is that even the best efforts of company directors will not always be enough to save a company when financial challenges are simply too steep to overcome. But bearing the above points in mind can help company bosses give their struggling businesses the best chance of survival and recovery.
By Mark Halstead
Mark joined Begbies Traynor in 2004, and launched the 1st version of Red Flag Alert (www.redflagalert.com/services); since then we have enjoyed tremendous success working within the UK Accountancy, Banking and Law communities, where RFA is a well established product, in 2009 we decided to broaden our products and services and launch the new Red Flag Alert services that are available to all today; Mark has enjoyed a varied working life from small family business to careers with William Hill Plc and Bank of Scotland before joining Red Flag Alert.