In this industry, we often see businesses at the very end of their journey; when they’ve had recurring trading losses and have nowhere else to go but into liquidation or bankruptcy (if an individual is trading the business).
In some cases, the business might have been saved if the owners had sought insolvency and turnaround advice earlier, when they were just starting to suffer financial distress.
Unfortunately, many struggling business owners either stick their head in the sand and blindly continue trading in the hope of turning it around themselves or are too embarrassed to seek help. They feel that the troubles in their business must be their fault. Right?
Wrong! ASIC statistics reveal that, for the 2017 financial year, only 46 percent of companies entering external administration did so because of poor management of the business.
Not all failures are caused by business owners! And help is at hand if you acknowledge your problems early …
Business rescue: specialist insolvency & turnaround advice
Business owners who are good at what they do (be it software developers, tradesmen, or builders) often DON’T know how to run a business.
This is a fact – but it isn’t something to be embarrassed by. Running a business takes a unique skillset that isn’t easy to learn without prior experience, training, and/or study.
That’s why, before starting up, you should seek the advice of a qualified accountant. This will ensure that your accounting systems are set up and you can also be taken through a crash course on how to run the financial side of your business successfully.
If, at any stage, and for whatever reason, your business starts struggling financially, you should immediately seek advice from qualified insolvency and turnaround practitioners.
They will be able to take you through the options available to you to save your business and recommend how it can be returned to profitability before the inevitable slide into liquidation or bankruptcy.
Seeking this sort of business rescue advice doesn’t mean you’re terrible at what you do. On the contrary, it means that you recognise the limits to what you can and cannot do yourself and are seeking help from specialists.
It’s no different to going to the doctor when you’re sick and no home remedy will help; or taking your car to the mechanic if it’s got a problem that you can’t fix yourself.
Seeking business rescue advice early helps all stakeholders
It’s a well-known fact that formal insolvency appointments result in practically no returns to creditors.
In fact, 96 percent of liquidations result in dividends to creditors of less than 11 cents in the dollar. Not pretty reading.
If you seek business rescue advice earlier, when your business still has assets, intellectual property (goodwill), debts owed to it, and access to funding, it is easier to get your creditors a far better return. Otherwise, trading losses will erode your assets and a liquidator or trustee will be appointed, who will charge tens of thousands dollars before ANYTHING gets returned to creditors.
Remember that some, if not all, of the creditors owed money by your business may also be small businesses such as yours, battling to survive and be paid what they’re owed. You owe it to yourself and your creditors to try and save your business early and get a better outcome for all stakeholders.
If your business is in financial difficulty, don’t delay seeking specialist advice. Get in touch on 1300 906 966 or email us at firstname.lastname@example.org.