A business in trouble really is “stress on demand” for business owners. The issues can be frustrating and the possibilities of business problems could do anyone out of a year’s sleep with ease. The financial burdens can seem back-breaking. If you’re in this position, try to shut down your emotions and think objectively. The way out is by looking ahead, not backwards. You may be surprised to hear that voluntary administration is one of the safer, better and quicker options for getting out of the mess and getting on with business.
The fact is that if a business is still able to trade and can meet its payments, there’s plenty of grounds for hope. The business may need some help and some professional expertise, but it’s not a hopeless situation.
This situation comes with some caveats, though:
- It’s absolutely critical to maintain viability with creditors.
- The business must perform sufficiently well to break out of the problem cycle of debts, costs and cashflow which usually sink most businesses.
- Business owners must recognize when they need help.
The mistakes to avoid
Business owners often try to manage their way on their own through situations in which they really need help. In some cases, business issues may be so complex that expert assistance is needed to steer clear of further problems.
The usual run of business problems is that one problem creates another. These problems can quite literally snowball, so the level of risk rises exponentially, and can turn into situations which threaten actual insolvency and bankruptcy.
The warning signs of a dangerous situation are:
- You have cashflow issues.
- You have debts falling due and aren’t sure of your ability to meet them.
- You’re not sure of your options or how to manage these issues.
If you’re in this position, don’t waste valuable time guessing about how to handle these problems. Get help, fast.
The voluntary receivership option
Receivership involves the appointment of a manager as the business administrator. Receivers are experts in business management, and are usually highly experienced. In some cases, you get the help of an entire team of administrators, with the appointed receiver able to access the experience and knowledge of his firm.
The role of the receiver is to turn the business around.
This may involve:
- Changing how the business operates.
- Collecting money payable to the business.
- Hiring or firing staff.
- Disposal of assets.
- Restructuring the business.
- Changing financial plans.
- Entering into better arrangements with creditors and financial institutions
The receiver is responsible for the conduct of the business over the period of voluntary administration. During this time the receiver is obliged to lodge statutory returns detailing the process of the receivership. This is a formal legal process, and it’s required by corporate law.
The fact is that unless a business is in an impossible position, receivers can do a very good job of dealing with the issues threatening a business. They can also provide useful and highly credible support when dealing with banks and creditors and chasing up debtors.
Don’t get depressed, get busy and check out the voluntary receivership approach to the problems. You’ll be glad you did.