Survival - Always act sooner rather than later!

It may be common sense, but you would be amazed at the number of people who bury their heads in the sand when it comes to actually taking action to save their own business.

Times are very hard at present – the statistics show that the number of companies in difficulty has increased exponentially across all sectors compared to this time last year, with construction and retail being hit hardest and fastest as usual.

The banks are all reviewing their lending and some are taking drastic action to reduce exposure in particular sectors and it is becoming more common to find a previously supportive bank seeking rapid and severe reductions in facilities.

In circumstances like these, don’t delay in seeking appropriate advice and support. Early action can often save more extreme surgery later.

Over the past few months Boldoak has been doing an increasing amount of work through its partnership with the Mercantile Group. We frequently find an overlap in customer needs between making positive changes to the sales strategy and other significant changes within an organization whether investment for expansion, planning an exit strategy or avoided a cash flow crisis or other difficulties.

In the case of the later, the penalty for delay can be extreme. The Mercantile Group had a recent experience, which it is meaningful to share, to highlight the importance of acting in good time, whether to grasp an opportunity or to avoid a disaster. A client made contact seeking strategic guidance and business planning support following a series of bad debts. On initial examination the business seemed viable with a good reputation, strong management, healthy order book and adequate bank facilities, due for renewal the following month. The current misfortunes appeared to be caused entirely by the latest and largest bad debt and it seemed clear that short term funding support would enable a period of stability which in turn would allow the directors to consider revised strategy and plan accordingly with Mercantile guidance.

Before there was time to execute the first phase of the work, a complete Appraisal of the business today – within a week – the bank had arbitrarily reduced the overdraft facility by 25% and was insisting on a further cut to 50% of the previous limit.

What had previously been a timing issue – requiring banking support or at worst an informal temporary agreement with creditors – had rapidly become difficult to manage. Regrettably the business simultaneously experienced a considerable downturn in enquiries and despite very healthy long term prospects The Mercantile Group had to advise on an immediate liquidation – hopefully with the directors able to salvage sufficient goodwill to enable a new start.

In this case timing was everything and earlier advice – perhaps a year earlier after the initial bad debt – would have made a huge difference to the eventual outcome. Earlier and more perceptive planning would undoubtedly have enabled the business to better weather the storm when it came.

Mercantile and Boldoak can usually help with recovery, refreshment and rescue – given sufficient time – but the lesson from this sad experience is that it is imperative to ask for help and act upon advice before there is too little time left.
If you would like to know more please contact me.

Babs Moore
Director
Boldoak Ltd
www.Boldoak.co.uk
Babs.Moore@Boldoak.co.uk
01480 383676