Insolvency Advice for Small Businesses in Cumbria to Avert Failure

On average in the UK, just over 10% of registered business stop trading annually.

Since 2015 there’s been an increase of 330,000 in the total number of registered trading businesses however, the attrition and business failure rate hasn’t really shown any signs of slowing. If you want your business to be sustainable for the long term, whether a new start business, an established family business or an organisation going through change of ownership or direction, please read on.

Insolvency advice for small businesses

So why do businesses fail and enter into business insolvency?

The main reason why start-up businesses, of all sizes and types fail within their first few years are commonly; 

  • There’s either no market or no longer a market for their product or service,
  • There’s too much competition meaning it’s difficult to obtain market share to grow and profitably trade.
  • As businesses grow, many fail due to poor cash flow management and just run out of cash.

This doesn’t mean, the businesses that fail are bad business ideas or the business owners and entrepreneurs lack business knowhow. However, it’s likely the owners haven’t approached the business strategically, they’ve got too emotional and passionate about their product or service, rather than put time in, to work “ON” the business. This is a common occurrence, whether they are just launching or expanding their business into new markets.

When it comes to established businesses, often the main reason they cease trading is their market has moved on. They either fold and cease trading or are approached for a takeover, from one of their major competitors, who’ve developed their business and haven't stood still.

Most major organisation failures over the last few years have been due to their leadership team having their heads in the sand, when it comes to a fast-changing marketplace. Some household names, you’ll recognise such as Blockbusters, Woolworths, Kodak, Polaroid, Toys R Us, Compaq Computers, BHS, Staples, Maplin and Tie Rack no longer exist.

Are you’re finding that there’s less business growth opportunities, or the current way you trade doesn’t look sustainable? Before you give up and throw in the towel, why not get in touch with myself?  I’m happy to have an exploratory chat regarding what your business turnaround options are.

There’s no need to worry if you are in a challenging business environment, as all businesses come up against obstacles and market force challenges at some stage in their evolution. It’s about planning scenarios, then implementing a turnaround plan to constructively overcome the challenges. So, rather than procrastinate, do something about it and move quickly before it’s too late!

Failing Business Advice in Cumbria

The steps we would take you through as a Business Turnaround Consultant would be:

Assessing the current and future market potential; validation of your business products, and services. I.e. Is the product or service currently still fulfilling a customer need? Do customers still want what your offer?

  1. Carry out market research
    • Where is the industry sector, in respect to its market life cycle; is it in growth, maturity, or decline?
    • How competitive is the marketplace? Is it a monopoly? Are there 2 or 3 main players or multi-organisations serving a vast fragmented market?
    • Do your business, products, and services, have a Unique Selling Proposition (USP), a clear market differentiator?
    • Do you have a reputable business brand you could leverage further?
    • Have you explored and managed to create multi-channel routes to market?
  2. When was the last time you calculated and ran at least 3 different scenarios on future growth? With a detailed profit and loss (P&L) forecast.
    • What will be your sales revenue projections, for next month, next quarter, this Financial Year and over the next 3-year period?
    • What’s your predicted sales split per product or service; gross margin, business expenses (fixed costs) and potential trading profit?
    • What will be the impact on business cashflow as the business grows and has to invest in resources, infrastructure, machines, vehicles, facilities, IT hardware and software, business services, more employees (wages), and Sales, Marketing and Promotion.
  3. When looking to the longer term, do you and the existing shareholders, owners or as proprietors, have an exit plan?

Once we have been through the above analysis, the next questions will help us start to formulate a plan.

  1. Looking forward, reflect on yourself and your team around you. Ask yourself, is the current structure, business hierarchy, roles, responsibilities, and capabilities currently fit for purpose? More importantly, will you be an effective team that can take the business forward by introducing change?
  2. How do you, the directors and business leaders manage yourselves out of the day to day to find more time to become strategic going forward?

Then it’s about defining and getting some actions down.

  1. What are the clear gaps and shortfalls?
  2. What are the risks and threats to the business and how you could mitigate against these?
  3. How can we prioritise what the management team need to focus on and work on first?

Business Rescue Strategies for Sole Traders, Limited Companies, Mature or Young Businesses

If you continue to just work “IN” your business, without spending time working “ON” your business, ultimately your business may become one of the business failure statistics. If you don’t act accordingly, you could even end up taking your eye off the ball and find business debts mounting up. Or being advised by your accountants that the business is no longer viable and it would be prudent to instruct an insolvency practitioner to dissolve the business. 

No matter the situation, remember you are not on your own and don’t be afraid to reach out. Get yourself a strong support network. There’s plenty of business support, business specialist and business consultants out there. Whether you access business advice through the likes of Cumbria Chamber of Commerce, Cumbria LEP, Federation of Small Business (FSB) or from the many independent professional organisations and consultants across Cumbria and the North West, don’t miss out on the opportunity for obtaining insight and expert professional advice.

Should you wish to have a confidential, no obligation discussion regarding where you and your business are currently, along with sharing the potential challenges and how the future may look, please do not hesitate to contact me.

Book your FREE CONSULTATION

Should you wish to discuss in confidence your plans or initial thoughts and steps on exiting your business,
please do just get in touch:

(+44) 1697 541145

peterfleming@pfbusinessconsultancy.co.uk

(+44) 07966 686112