Statistics indicate that several UK small businesses declared insolvency in 2021. The figures went up to 1,449 small businesses in September last year. The question now is whether these businesses could have been saved if they had taken timely steps. If your company is currently on the brink of insolvency, there are some measures you may want to put in place. Of course, if the business is worth saving, you need to do your best, and here are a few to consider.
An immediate change in management
Sometimes, businesses that find themselves on the brink of bankruptcy need a change in management. The presence of new individuals, fresh ideas, and renewed energy can make all the difference. A change in management is a crucial and intense decision. It could breed animosity and ill-will among your top executives if not done well. There are different ways to change management if you’re bent on going that route.
The first is to sell the company to an interested investor. As the largest shareholder, they automatically possess the right to change management. However, selling the company requires strict processes that cannot be ignored. There is a tonne of paperwork to be completed, meetings to be held, and financials to be prepared. Because you need experts to lead the way, you can check sites like Sell.io for specialists in business selling and buying.
Selling your Business
If you’re not selling the business, you may want to try an internal reshuffle. This is when you move your executives from their existing roles and place them elsewhere within the business. This technique allows you to replace sensitive executive roles in the organisation. Although this may be met with opposition, it is your responsibility to explain its benefits for the company. As a small business, there is a high possibility that you alone make up management. If this is your case, you will need to rethink your business’s operational structure.
Ask for flexibility with suppliers
Financial mobility is restricted when a company is on the brink of bankruptcy. In other words, there aren’t enough financial resources to get the business running. This inadvertently affects suppliers and vendors. In your specific case, it would be wise to strike an agreement with them. You can ask for payment flexibility to help you utilise the little funds for other salient company operational areas. Making things known to your suppliers can be a wise business decision.
In the meantime, your vendors and suppliers may offer to negotiate a payment plan. Sometimes, you may be fortunate to have discounts which can go a long way to help you stay afloat. Admittedly, things may not always go to plan with your suppliers. However, a suitable agreement can be reached if you have a long-standing relationship with them.
Prioritise your debts
According to data on the ft.com website, several small businesses in the UK have debts over eight times their business cash balance. In other words, small business debt in the UK is widespread. Finding yourself in this situation can be tricky, especially when you must prioritise your debts. You can start by categorising these arrears. For example, tax, vendors, payroll, utility bills, etc. Using this list as an example, government tax will take precedence. After that, all others will follow.
Putting measures to avoid bankruptcy can solve some of your small business’ problems. However, sometimes it might not save the company.