When your company isn’t doing well, and it looks as though the business is about to wind up due to debts, lack of cash flow, poor sales, high overheads, or any other number of factors, it can feel like there are a million different problems and not one guaranteed solution. Turning the tide can seem like an impossible challenge when you analyse the direness of your current situation, but rest assured there are always steps that can be taken to mitigate or prevent the downfall of a business. With that said, here are 3 primary rescue efforts that every failing company should take before winding up.
1. Consult with Insolvency Practitioners
A licensed insolvency practitioner will be able to recommend a suitable course of action that will help minimise debts and maximise the current potential of your company’s assets and incoming funds. You may be able to enter into a Company Voluntary Arrangement (CVA) with your creditors and HMRC to avoid winding up due to unpaid taxes and debts. An insolvency practitioner can also help by facilitating an Administration procedure to oversee management practices and guide the business out of insolvency. Alternatively, one of the company owners may be able to make a personal guarantee against one of their own assets in order to keep the business from being wound up in court.
2. Increase Marketing Efforts and Redesign Sales Methods
After you’ve spoken to an insolvency professional, you may also want to consider some last-minute marketing attempts to see if you can generate enough revenue to get you out of the hole and over the hill. You may have to redesign your website, change your products/services, and rehaul your entire sales strategy, but all of these steps are worthwhile when you consider the possibility of saving your business from dissolution. Ultimately, assessing and addressing your company’s strengths and shortcomings might be all that’s needed to make your company profitable.
3. Seek Financing and Liquidate Non-Essential Assets
Cash flow and investment capital can go a long way in saving a struggling business, so it’s important that you do whatever is necessary to come up with the funds needed to take effective action. After you’ve exhausted all possible financing options, consider selling equipment or inventory that isn’t essential for the continuity of the business. You can use the proceeds to repay debts and invest in marketing services, as mentioned in tip 2. Making the right investments can help patch some of the holes in a sinking business and keep it afloat through the storm.
Devising a Feasible Recovery Plan and Following Through
The old saying “where there’s a will, there’s a way” is certainly applicable when it comes to saving a company from winding up. Whatever has been done wrong up until this point can still be corrected in most cases, but it’s imperative that the company owners/directors act immediately to increase the chances of recovering from insolvency without winding up. It may take some sacrifices and a complete company makeover, but in the end, you’ll be glad the business didn’t fail.