With recent statistics showing the number of company liquidations in England and Wales is up 17%* on the same period last year, Bibby Financial Services is advising owners and managers to revisit basic business principles to avoid a crisis.
David Robertson, chief executive of Bibby Financial Services, said: ìIt is a sad fact of business life that some businesses will fail, and for those 3,439** companies forced into liquidation in the first quarter of this year, this must be put down to experience. But, with the acumen, finance and drive to succeed, following some basic rules may dramatically improve a companyís chances of success.î
To help business owners and managers achieve business success, Bibby Financial Services has developed ten ëback to basicsí principles:
ëPlaní is a four-letter word ñ researching the market you are intending to enter is paramount. Be sure there is a demand for your services and identify who the competition is. Donít forget to review your business plan and, if things have changed since you made it, ask yourself why.
Pace yourself ñ budgeting is essential at all stages of the business lifecycle, but investing too much too soon may lead to a business becoming over-stretched.
Credit where itís due ñ negotiate longer credit terms with your suppliers but set shorter terms for your customers. Consider how early settlement or volume discounts could benefit your business.
Lay out your own terms ñ establish and agree credit terms upfront. Ensure invoices are issued promptly, clearly displaying the conditions of the transaction such as ìpayment dueî.
Cash is king ñ cash is fundamental to any company and businesses must recognise the importance of generating cash and keeping it coming in. In the event of a cash flow blockage, explore alternative funding methods such as invoice finance which can release up to 85 per cent of the cash tied up in unpaid invoices.
Streamline ñ look at ways in which internal processes can be carried out more efficiently and donít be afraid to cut out wasteful tasks. Review your suppliers regularly to ensure their quotes are competitive and offer best value for money.
Delegationís what you need ñ by delegating time-consuming non essential tasks to other staff members, owners and manager will be freed to focus on the business’ core activities such as generating new business.
Ask the experts ñ seek external advice from an independent source such as an accountant, lawyer or business adviser. But remember to choose carefully ñ it is imperative that you select someone who appreciates your needs and understands which direction you want the business to go. Counsel from an outsider may also stop any rash decisions being made.
Honesty is the best policy ñ be realistic. If things are not working out how you thought they would, address the reasons why this is happening and find a new approach.
Roll with the punches ñ every business, at some stage or another, will experience a certain level of difficulty. Be decisive by tackling any problems head on and dealing with them promptly.
David Robertson concludes: ìNo business, whether itís at an embryonic stage or has safely negotiated itself though the first few months of trading, has the desire to become the latest bankruptcy statistic.
ìIf things are not going to plan, acceptance of the situation is the first step to recovery. Speaking to specialists about the best way to plan and manage cash flow, as well as finance your business, can lead to difficulties being avoided further down the line.î
For further information on financing your business contact Bibby Financial Services on Tel: 0800 91 95 92
Avoiding the pitfalls of insolvency
Bibby Financial Services is advising owners and managers to revisit basic business principles to avoid a crisis
