As the England Cricket Team stutter along in the Cricket world cup, the nail biting and nervous win over South Africa this weekend gone, could be reminiscent of the country’s attempt to secure victory over the failing economic climate.
We have seen the coalition government make huge cuts in order to reduce the deficit, but with the continuing uncertainty in the middle east and the resulting rise in the petrol prices, along with the constant warnings of interest rates rises, the road to recovery looks rather less likely to be a smooth one.
How to Survive
With so much doom and gloom around how do we prepare ourselves to survive the difficult times ahead?
As in many cases the solutions is always one of identifying the options and taking informed decisions in a timely manner. The head in the sand approach is one to stay well clear of.
1) Don’t bury your head in the sand
When business problems start to take over your life it is imperative to seek professional advice as early as possible. If you need specialist insolvency advice, make sure you speak to an insolvency practitioner as soon as possible otherwise you could be liable as a director for not carrying out your duties. Fortunately, recent case law has clarified that as long as the directors act in accordance with professional advice, they should avoid personal liability.
2) Cash is always king.
If necessary businesses should focus on cash flow at the expense of profit. Consider strengthening credit control procedures, reducing stock levels, selling surplus assets and negotiating extended credit terms from suppliers.
3) Cut costs as soon as you can
Where expenditure needs to be rebalanced to match reduced revenue, it is important to do this decisively; lots of small adjustments can feel disheartening and may take time to implement, but could result in the survival of your business.
4) Check your terms of trade
Many Businesses have relatively little experience of their customers becoming insolvent. In a sharp recession, the risk of customers becoming insolvency will come a more frequent part of doing business. Businesses need to review their terms of trade to include provisions to charge interest for late payments, termination of contracts, taking early recovery action to claiming a lien or retention of title of goods. Additionally, obtain up to date credit reports on major customers and monitor these where the ratings are not as strong.
5) Maintain up to date management information
Businesses should make a bigger effort in producing accurate monthly management accounts and key performance indicators and monitor thee against their business plan. This will identify potential threats or opportunities allowing for decisions to be taken early.
6) Prepare or update your business plan –
However tedious this may seem, it is imperative to understand where money is being made or lost. Most importantly, more and more businesses will need this information to optimise their cashflow and maintain reasonable headroom within agreed facilities.
7) Take advantage of failing Competitors
For every business that fails there will be customers, key personnel and other assets available to those that survive. Take advantage of these opportunities when they arise. Keep in touch with professional advisers and register your interest with them.
There are usually a number of constructive operations available, especially when you take early advice. This may be the first time you have faced being unable to pay creditors but we see this type of situation every day. Even if a company cannot be saved, often the business can.
So as we wish England Cricket Team well in the world cup, let’s hope the coming tournament can provide the catalyst to uplift the dampened spirits of the country.
If you or your business are facing challenging circumstances that you have not faced before then you need to seek professional advice. For a no obligation discussion in confidence please feel free to call Kingsland Business Recovery on 0800 955 3595 or visit www.kingslandfs.co.uk
