Running a business is stressful and when times get tough it can be easy to ignore the problem and carry on as if nothing is wrong. Acknowledging that your business needs help can be distressing, but what’s worse is looking back and wondering if things would have turned out differently had you acknowledged your problems earlier. Here are some common mistakes businesses make when they are in financial distress and how you can avoid them, according to the experts.
- Getting advice from someone that isn’t looking out for your best interests.
Businesses suffering financially are vulnerable. Unfortunately, some people will try and take advantage of this vulnerability. According to financial crisis advisory expert Ginette Muller, “This unscrupulous advisor is easy to spot because they only want to talk about liquidation.” Ginette Muller believes that a trustworthy advisor should also be open to talking about other options such as capital refinancing and the potential to sell your business.
- Waiting too long to seek professional help.
It’s important that you seek help from a professional as early as possible. Trish Talty is a bankruptcy advisor with 30 years of experience. Trish says she regularly sees businesses who have waited too long to seek professional advice. She says, “If you keep doing the same thing you’re going to get the same results”. Instead, Trish urges businesses to speak to a professional as early as possible, when still solvent, to maximise the options available.
- Listening to advice from too many people.
Michael Hird has 25 years of experience in consultancy, and he commonly comes across people who take advice from too many people, slowing down the process and reducing options. He says, “When a decision is made quickly I can work with it, otherwise you see me today and come back three months later and I’ve got nothing to work with”.
- Refusing to review your business model and its relevance.
Technology moves fast. A business or service that was relevant one year can easily become irrelevant the next. These trends are hard to predict, and you can’t always be blamed for not foreseeing that your business might lose relevancy over time. However, it is your responsibility to review your business regularly and evaluate how relevant it is to your clients and customers. According to expert John Shanahan, “If you’ve done your review and the product or service is waning you really need to get advice and see what your options are.”
- Sticking your head in the sand and wishing your problems away.
Finally, the overarching mistake Michael Hird sees businesses make is pretending the issue isn’t there and hoping it goes away. While it can be hard face up to the financial issues your business is experiencing, things will only start to get better once you do.
If your business is experiencing financial distress, do not wait to seek professional advice. Speak to an experienced member of the Insolve panel and get your business on the right track.