5 Ways to Think Straight in Difficult Times
What you need to know when saving your company from going bust.
Face up to Reality
Before I get into any detail the first and most important thing to do is face up to reality. It may be painful, or even frightening, but you need to take a long hard look at your company from all angles to see how much and what sort of problems you have.
5 top tips to consider when saving your:
1. Is it worth saving?
This is the toughest question of all. Your business is a very personal matter. It is something you may have spent most of your working life building up. It’s almost a member of the family. But there may come a time when you have to say; enough is enough. If you have a limited company the process of putting into liquidation is quite straight forward. The liquidator will be professional and never judgmental. Limited liability is there to protect you and your assets. Remember that loans that you have given a personal guarantee for will need to be paid to avoid losing your property. However, the next stage of bringing things to an end is to go into personal bankruptcy. It sounds terrible, even shameful, but it isn’t. I’ve been there. It’s a process, and again the court will not be anything other than professional. This may be your first time, but they have been through this thousands of time. So, are you going to sail on, or abandon ship before you go down with it?
2. Behind Every Successful Businessperson is a failed business.
There are a huge number of successful business owners who have failed in the past. I was one of them. Other, rather more famous names, include; Henry Ford, Roger Dyson, Thomas Eddison, Arianne Huffington and many others. Success is not a good teacher, but failure is a brutal one. If you learn the lessons you will emerge stronger, wiser and better equipped to succeed.
3. It is Darkest Before Dawn.
We have all laid awake at night worrying. At 4 am, after a restless night, everything can look very bleak indeed. This happened to me. My company was jointly owned with my wife. And we had got into serious trouble. So, after laying for hours worrying, we got up at 5 am, went to the office and made a plan. That plan lead to the successful sale of the company a year later. Metaphorically step to one side. Step out of the path of the traffic screaming all around you and take stock. Look at your debt, look at your costs, looks at your real orders, not promises, look at your staff. Detach yourself from the company and look in from outside. Now, start making decisions.
4. Borrowing Money
My first words of advice are; be careful. Be very careful. Go back to Top Tip 1 above before proceeding to take on more debt. Will the debt keep you afloat or drag you under? I have a deep-rooted mistrust of banks. They are huge organisations that make billions of pounds and if you are not careful you can get trodden underfoot as they rush to make more money. This may be a jaundiced opinion but whatever your relationship is with your bank be very careful what they ask for in terms of security. Banks are very risk-averse, and will not do you any favours. COVID has lead to additional types of funding, and this is a good source of detail:
There are many exemptions and if you have had previous difficulties you may not qualify. The bank will not, as I said, want to take any risk.
Consider as an alternative Peer-to-Peer lending. An example is The Funding Circle. They are, in fact, having their own financial problems at the moment as the lending market adjusts to COVID but they are still very much open for business. We used the Funding Circle twice. The first loan was taken up by dozens of small lenders. The second one was snapped up by one lender because we had proven our ability to repay. There were no personal guarantees and the whole process took minutes. The interest rates are slightly higher than banks, but the claws are less sharp.
Think very carefully what the money will be used for. Focus on that use and stick to the plan.
5. Negotiate with Everyone but a Promise is a Promise.
There is nothing easy about saving a business and it may not make your popular. Everyone can be negotiated with, not always successfully but most suppliers and customers will listen. Try to delay paying anything and everything that you can. Try to get money in quicker form everyone and everywhere. This will help close the cash-flow gap. It's not a pleasant ride but one that has to be ridden. The golden rule is, if you make a promise, keep it. If you get agreement to delay a payment by a month, make sure you keep to that agreement. This builds trusts. Rarely do other people want you to fail. So, help them, to help you.
If you want to discuss your situation in more detail please do not hesitate to speak to our expert on 07860 607815 or email firstname.lastname@example.org.