Recent news reports have uncovered that the number of business insolvencies in the past year has exceeded the number that failed during the global financial crisis in 2008.
The data released by the Insolvency Service, reveal that 25,551 companies fell into insolvency in the past 12 months. With such high numbers of businesses failing, what can you do to avoid insolvency and protect your business?
As expert business advisors, we’ve put together a quick guide with some of the most important areas that businesses need to pay attention to so that you don’t become a statistic in next year’s insolvency report.
Have a read through – and get in touch with our team to discuss how we can help your business today.
Ensure your cashflow management is sound
I know I’ve said it before, but cashflow really is king when it comes to running a successful business.
By effectively managing your budgeting and cash flow, you can ensure that your business remains financially stable and well-prepared for future growth.
If your cashflow isn’t stable, your business is at a high risk of becoming insolvent. When it comes to improving your cashflow, there are a few steps that you can take to make a real difference.
Forecasting can have a huge impact on your business’s success. This involves predicting the money that will be coming in and going out of the business. As a result, you’ll be able to identify potential cashflow issues before they occur, giving you the time to plan and act.
It’s so important to be stress testing your business model on a regular basis to ensure that it is sturdy enough to withstand the economic challenges of the present day. Identifying any pinch points that may occur is crucial- whilst these may be a cause for concern, it’s important not to view this as an obstacle to your business’s growth.
Pinch points are to be expected but planning ahead for as far as possible is going to be the best way to work around them. Once identified, you’ll be able to prepare your business for the challenges that lie ahead and ensure that you have an appropriate safety buffer in place.
Other useful ways to improve the cashflow management of your business include vetting your customers, reducing your payment terms, improving your credit management, managing your inventory and embracing new technology.
There’s no one size fits all solution for this, so I really would recommend speaking with one of our business advisors who will be able to talk you through what’s going to be best for your business.
Work on your Sales and Marketing channels
A lot of businesses that struggle with cashflow related insolvency issues find that they can’t bring in work consistently, or that they are often reliant on the same group of customers. When this is the case, it’s usually because not enough time and thought has been put into sales and marketing strategies.
If you’re relying on too small of a customer base, you’re really standing on thin ice. All it takes is for this to deteriorate and your business is going to be in real trouble.
Therefore, it’s so important to be focusing on ‘refilling the bucket’ to speak and making sure that you’re able to replenish customers as they come and go. If you can’t do this, it’s only going to be a matter of time before you’ll notice some serious issues affecting your cashflow.
Build a quality team for your business
Even the best people in business need to be surrounded by a good team.
It’s crucial to put the effort into building a good quality team to work within the business, so that you’re able to focus your time and effort towards working on the businesses and bringing results.
If you’re not able to devote enough time to the aspects of the business that need you, then you’re going to find that the growth of your business is held back, or maybe even worse. Searching for team members that are better at things than you really is not something that you should be afraid of. Delegation of responsibility to people who are specialists in their areas will free you up in terms of time and energy and ultimately avoid insolvency and take your business to the next level.
Secure your businesses finance options
Securing your access to finance is going to make a big difference to your business over time.
As a business owner, it can make such a difference to build a good relationship with your bank, and making sure that they understand your funding requirements. The more finance options that are made available, the better chances that your business is going to be able to take advantage of this support further down the line. There’s a real range of invoice finance and asset finance options out there so it really can pay dividends to work with specialist partners such as our team at Nordens to unpick which finance options are best for your business, both now and in the future.
We’re here to help you
At Nordens, we understand the challenges faced by business owners and entrepreneurs when it comes to avoiding insolvency and achieving sustainable business growth. We offer expert advice and assistance with all of your business needs: from your everyday accounting to Advisory, Tax, Audit and more!
Whatever you need guidance or assistance with, we have the knowledge and expertise to support your business with it’s growth journey.
For support with any accounting services, you don’t need to look any further than Nordens Chartered Accountants.
Contact us today at 0208 530 0720 or fill out our contact form to schedule a consultation.
