At Leading Strategies, we work with a wide range of business owners who are experiencing difficulties with maintaining the life of their company. In many cases, the directors of a struggling business adopt a ‘head in the sand’ approach and by the time they reach out to us for advice, it may well be too late and a formal insolvency procedure is needed. We always aim to preserve the life of a business so I thought It would be worth sharing our top tips to help you recognise some of the actions you should take along with the options available to you.
- Plan for survival
It probably sounds obvious, but always have a plan B. A sudden downturn in the economy, an event that threatens your suppliers, an unexpected bill – these things can all have a huge impact on the sustainability of your business. Having a good back up position and a decent amount of contingency cash will ensure you can survive any leaner times.
- Understand your marketplace
Having a clear understanding of what is happening in your market and how this might affect your business is essential. Changes in legislation may hinder your plans to export for example. Identifying what changes are on the horizon and preparing for them before they happen will leave you ahead of the competition.
- Manage cash carefully and effectively
If you’re raising invoices, collecting monies and billing efficiently, then you’re definitely on the right track. Business owners should have a clear overview of the financial health of the company at all times and know what the triggers are for them to seek outside professional advice. With a wide range of cloud based accountancy packages on offer, these days, its easier than ever.
As much as we wish for any problems or downturns in trade to disappear, more often than not, they don’t. If you start to catch wind of any potential problems in your business, then communication will be your best friend. Early identification and communication with your accountant, financial advisor or bank may be the key to your survival as a business. As difficult as it can be seeking help and advice, being proactive with these issues is more likely to gain the support of your staff, suppliers and other stakeholders, than avoiding them and creating bigger problems in the near future.
- Avoid kneejerk reactions
We often work with business owners who have made knee jerk decisions to downsize when times are leaner. Whilst cutting costs can be an effective way of pushing the business through a turbulent period, seeking professional advice and taking the time to consider the long term impact of any decision you make is essential.
- Focus on your core offering
During periods of turbulence, revisiting your core offering and pushing your most profitable goods or services can be an easy way to improve income. By streamlining where you focus your energy and sales activity, you will stop spreading yourself thinly and give you a better chance of survival.
- Look at your asset base
If your company is struggling with cash flow, it may be the time to look over your assets. Do you have unused machinery or stock laying around that can be sold, for example?
- Look at your financing
Is it time to consider whether any financing products are suitable? There are a huge variety of options available on the market; invoice financing, factoring and lease agreements are just a few. For a short term injection of funds, financing could be the answer.
- Bring new equity into the business
With a new breed of ‘business angels’ looking to invest in viable propositions, considering external investment could help you ensure the business survives. Of course, a business angel may want to have some sort of involvement with the company as part of their investment but this means you will receive independent, objective advice and often very experienced advice from somebody who will also be keen for the business to succeed!
- A question of survival
The key to survival is that you identify potential issues and implement steps to address them before they become bigger problems. Seek advice at the earliest possible stage to ensure you can put together a robust plan to see you through more difficult time.
The team at Leading Strategies are well placed to support business owners who have identified or are experiencing business issues. Get in touch today for your free, confidential, no obligation discussion to see how we can help.