Your business is likely to be your pride and joy, but in a volatile economic climate, no matter how hard you work it can sometimes be difficult to succeed.
If your business is experiencing problems, it can be tempting to bury your head in the sand and just hope that things will improve.
However, although you might be lucky enough to survive, there’s a good chance you will only end up further in the mire. But by taking proactive action and opting for a financial restructure you could end up with a stronger, more solid business than before.
We take a look at financial restructuring and what it could mean.
It may be time to get the calculator out and restructure your business finance.
Your business may be thriving and successful but unfortunately it doesn’t take much for things to start to go wrong.
There’s a whole chain of organisation inextricably linked to each other’s finances, relying on supply, demand, credit and delivery in order to continue to be profitable. Unfortunately it only takes one of those links to start to fail to affect everyone. And it may be that the business that fails has nothing to do with you.
For example, your supplier may experience a default on a big business account of theirs; in order to swallow this loss they might be forced to call in their debts or shrink the amount of credit they extend to their other customers. This means you.
So even though the failure was unrelated to your business, you might end up facing the consequences. If you are buoyant you may be able to ride out this little hiccup with barely a bump, but if you are experiencing leaner times yourself, this additional financial pressure could push you to breaking point.
It’s not just unprofitable or ‘bad’ businesses that sometimes need a financial restructure and it may be that the reason you are struggling has little to do with your own past actions or failures.
How Restructuring Could Help
It may be that you are just experiencing a small downturn and that things will naturally resolve in a short space of time. That’s just part of the natural ebb and flow of business and nothing to be too concerned about.
However, if the downturns start to be more regular, or there’s no end in sight, it’s better to take action sooner rather than later.
Many business owners defer going through a restructure for fear of what the changes may mean. Sadly, in many cases, by delaying addressing the issue, the options are markedly reduced and the outcome may be less than desirable.
Early intervention is key; this can be the way to get the business to move in the direction you want thus avoiding a complete crash.
By getting help from experienced financial restructuring experts, you could access funding or free up cash flow for your business. And this could be the single thing that sets you on the straight path to recovery. If all else fails these experts could also advise on the best way of closing a limited company.
Change doesn’t have to be negative and admitting that you need help is one of the most proactive steps you can take.
Of the many businesses that ultimately fail and end up in administration, there’s a large proportion that could have been saved if they had taken earlier action. A successful strategy does not include ignoring the warning signs and hoping that things will get better; no business every succeeded in the long term by using this approach.
If there’s advice on hand from experienced and qualified individuals who can help you get your business back on track, you’d be crazy not to take it. Financial restructuring can take the misery out of the daily struggle and help you to get your business back on its feet again, and in better shape than before.
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Anthony Amaradio is the Chief Strategist and Founder of Select Portfolio Management, Inc. (SPM). The ...