Often one of the major obstacles preventing SMEs from growing, or in some cases surviving, is the lack of available finance. Even those with the right credit history don’t always get the help they need from the major banks.
New research published by the accountancy practice Wilkins Kennedy shows that retail insolvencies were at their highest level in 2013 for five years. The figures highlight that despite the economic recovery, the number of retailers falling into financial difficulties continues to grow. For the year to the end of March 2014, 1,287 retailers became insolvent.
When a company requires corporate recovery advice or enters the insolvency process, it shouldn’t necessarily mean the end of the business. In many instances, the company remains viable and could be saved through a process of restructuring.
Even if you have the world’s greatest products or services, and even if you have the world’s greatest business model, your business will never succeed or be profitable if it doesn’t get paid for what it sells.
If you run a busy company then it can be easy to ignore the early signs that you may be in trouble financially. Debts tend to creep up on you quite slowly and unless you really have your eye on the ball it can be hard to identify potential problems. However, before you know it, things can take a very swift downwards spiral and from there on it can be very difficult to get back on top.
In recent years we have had quite a bleak economy, with a record number of businesses either struggling financially or ceasing to trade. When this point is reached it is likely that corporate recovery advice will be sought. In a nutshell, corporate recovery is when professional accountants and specifically trained staff are drafted in to help nurse a company or individual back to financial well being and resolve the issues that brought them into the negative position.
You may be a little surprised to see us commenting on the Chancellor’s recent Budget. After all, we don’t advise on tax issues. However, deep in the small print of the Chancellor’s announcements was one piece of bad news … really bad news.
In these austere times everybody has cause for worry – particularly company owners. If you are at the helm of a business then you will have seen your company through the good times and the bad, however there is always the very real risk of something going terribly wrong. At this point many companies are faced with the very real risk of company insolvency.
According to research by peer-to-peer lending group, rebuildingsociety.com, the average SME business owner has invested £22,700 of their own personal money into their business in the last year. And the study shows that 37% of those planning to raise money outside traditional bank borrowing will use their personal credit cards (despite standard interest rates typically being around 18.9%, and often much higher).