The competitive nature of modern economies can leave any company vulnerable to the prospect of financial disaster. Difficulties with debt and creditors can quickly run out of control with anything other than a truly robust business strategy and a reliably winning formula.
Here are some key action points to have in mind if your business is close to the brink and facing the prospect of financial collapse.
Analyze Your Accounts
There can be any number of underlying issues that lead to financial distress for any business. It is very important to analyze and try to identify where the biggest problems lie if your company is facing serious difficulties.
With the help and cooperation of key stakeholders, your fellow leaders and an accountant, the first stop for scrutiny should be your company finances. A detailed look at a business’s expenses, incomes and debts will often go a long way to telling the story of where its primary failings are to be found.
Restructure Where Necessary
Leading the process of restructuring and reorienting a business is never likely to be easy or straightforward, but, when there are few or no other alternatives, then radical action becomes not only preferable but necessary.
From the point of view of a company director or a business leader, it helps to have the right advice and support as you approach this kind of an undertaking. What will help initially is taking the time to understand what debt management and consolidation options are available.
Stop Unnecessary Expenses
When a company is facing a genuinely bleak financial picture, it is time to reassess exactly which of its expenses are necessary and which are not. It’s an unfortunate reality that businesses in times of financial crisis are obliged to end the employment of certain staff members and to end long-standing relationships with valued suppliers.
The aim of anyone leading an attempted turnaround of an ailing business has to be streamlining its finances and trimming back expenses in every way possible. As a result, tough choices and decisions have to be taken with the clear goal of keeping a company in business for as long as possible.
Consider Alternative Funding Options
If you have had applications for funding or loans turned down by banks or by other traditional lenders then it can be worth considering alternative options and other routes to finance that offer your company a lifeline.
It is notoriously difficult for small businesses to secure funding or flexibility from traditional lenders at present but there are plenty of other places to look for assistance and opportunity. SMBs can, for example, sell their invoices to third parties for a fee and raise cash much more quickly than they otherwise might.
Other alternative ways of generating a cash injection include selling and leasing back equipment or vehicles or any other valuable assets your company owns. Or you might be able to buy new equipment or tools over an extended period of time and avoid the financial pressures that come along with large-scale upfront payments.
Look into Insolvency
It is no company director’s dream to find themselves investigating some of the finer points around insolvency or corporate administration. However, if a business does reach a point at which it is unable to continue trading then it is important for its leaders to understand as much as they can about the insolvency options available.
With the right support and advice from relevant experts in the field, even the worst financial circumstances can be safely and prudently navigated in the best interests of all stakeholders and individuals involved.
Author: Emily Trant is Managing Director of Check Business, a technology start-up that helps SMBs solve the key business challenges of: getting paid, finding new customers, and raising finance. Emily has a successful track record of delivering growth and innovation in digital businesses, and loves getting under the skin of small business challenges. Originally from Canada, Emily has a degree in Economics from the University of British Columbia.
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