Life in the UK has seen a seismic shift these past two months and we are living through, and managing businesses through, a time that is unlike anything that has come before. It follows therefore that business owners and directors are finding themselves in new uncomfortable territory.
As a restructuring and insolvency advisor, there are a number of tips and suggestions that I often give to businesses facing disruption. Below are a few of these tips and suggestions, which are now relevant to almost everyone contemplating trading through the coming months.
Look forwards – While difficult to do at the present time, it is vitally important that businesses forecast their expected outcome. A well-prepared forecast will highlight if and when the business is going to face a cash shortage, giving the directors the chance to do something about it. Simply hoping for the best doesn’t cut it in an environment that is anything but ‘business as normal’.
Speak with key stakeholders – Who are the people and entities, internal and external, that are critical to your business’ success? Speak with these stakeholders and find out how they are coping. Can they continue on current terms for the coming months? If it’s a supplier, can they handle you stretching or varying your payment terms? It’s true, cash is king, but a director who stops paying without warning is eroding hard-earned goodwill and at danger of losing friends. Like people, businesses need friends now more than ever.
Document decisions – Directors have been making more decisions about their businesses than normal, whether they realise it or not; even by continuing to trade when the rest of the world has turned on its head is a decision. Directors and the companies they run are distinct from one another and the former has a duty to act in the best interests of the latter. Decisions made during times of uncertainty need to be documented, especially when there was no obvious choice and a ‘reasonable director’ could well have acted differently. When making these records, a Director should reference the factors within their consideration which affected the decision made.
Get help – The last two months have been exhausting for many directors and the next two look to be equally demanding. Any business owner or director who begins to feel they are out of their depth should get help from those with the expertise they need. We professional advisors mightn’t know the first thing about running the daily operations of your business but we have made a career out of assisting directors of all kinds of businesses to solve problems. It could be the difference between a right or wrong decision or a successful or failed negotiation.