Can Your Business Be Rescued?

The hard truth is that nearly 60% of businesses fail in their first 3 years. The longer the timescale, the higher this number is. This means that, your business is likely to struggle and could possibly become insolvent. However, this does not always mean that a business cannot be rescued.

This can be the result of many factors including economic downturns, changes in your sector, or trouble accessing finance. Regardless of the reason, the outcome and consequences remain the same. If you are worried about your business’ viability, it is important to act quickly and find a strategy that works for you.

Why Is Your Business Struggling?

As mentioned above, there are lots of reasons that a business may not perform as well as initially predicted. It usually comes down to either a lack of cash-flow or, a lack of working capital. When there is more money going out than coming in, a business is very quickly in an insolvent position.

Sometimes, this is a temporary issue, and the business can be rescued. However, often, this signals the beginning of the end for a business. A return to profitability is extremely difficult. A decline in trade can very easily become a vicious cycle with no way of returning to profitability.

How To Stop A Business From Failing

Although it is difficult to be optimistic about the future of your business, it is important to know that there are solutions available. If you think that your business is viable in the long term, you can try:

• Looking at accounts to determine if one specific area is causing issues.
• Cutting costs/overheads.
• Speaking to your creditors.
• Restructuring your debt.

At this point, you need to be realistic. As a director, you will have put a great deal of time and effort into rescuing the business. This can make it particularly hard to ‘let go’ when your company’s circumstances are dire.

Often in an attempt to help their business directors will increase their personal exposure through cash flow loans and invoice financing agreements. So, failing to recognise the warning signs does little other than increase your liabilities, your exposure and prolong the inevitable.

If you are at this stage, you should consult with a business debt expert to find out exactly what the best options are before making any decisions.