As with any disease, early diagnosis is always beneficial even if only to make the surviving period less traumatic.
For the business owner admitting there may be an issue is always the first hurdle to overcome just as no-one every really wants to admit they may be ill.
To allow you to act before it’s too late a proactive review of your business on an ongoing basis must be worth some serious consideration, regard it as a ‘BUPA’ health check if you like.
Here are a few ‘”checks”
- Is your hardcore overdraft increasing and your account rarely moving into credit?
- Have your creditor days reached unrealistic levels?
- You lease rather than buy assets, which is what you always used to do.
- You think breaking even is good news.
- Your credit report is getting worse.
- The bank is never off your back and have asked for PG’s.
- Key staff are leaving.
- You are paying suppliers on the drip.
- Your VAT and PAYE are in arrears
- Suppliers are asking for pro-forma payments
So, now what do you do if the diagnosis is not favourable?
The issues mentioned clearly require a two pronged approach;
- Emergency room actions and
- Long term palliative care
For the emergency room
- Stop spending anything, unless absolutely essential.
- Beg, borrow (not steal!) funds from every available source.
- Talk to your staff, customers and suppliers and ask them to stand by you and explain what you are doing and why you are doing it.
- Cut costs everywhere.
- Take advice and do what the professionals recommend.
For the palliative care
- Revisit and change your management structure and even style.
- Recognise the mistakes you made an put in place procedures to prevent it happening again.
- Re position your business and maintain a competitive advantage.
- Line up new investment for the future.
- Expand your market and your products and services.
- Get the best financial advice and systems.
- Don't overtrade, sell on quality and service, not price and only to people that will pay on time.
Finally, if the end looks inevitable try and leave with some integrity.
Ok, I realise that pre-packs have become the norm but reputations are what businesses are usually sustained on, don't lose yours and don't lose yourself.
Head of Corporate Finance for MGR
0844 826 2851 / 0207 644 9674 / 07850 475878