As businesses emerge from the COVID-19 pandemic many will be facing challenging trading conditions and some may be facing insolvency.

The circumstances of the past 12 months have been challenging for all and despite varying degrees of Government support it is likely that some family businesses will be facing tough conversations about the future of the business.

In this episode of the show I speak with Steph and Gareth Buckley from The Insolvency Company to help those that may be facing insolvency to understand their options and what to know in order to take control of the situation you are facing. This post summarises what we discuss in the full episode.

Understand your Numbers

The first step in understanding where your business stands is to understand your financial position. Speak to your accountant about providing you with up to date and accurate figures.

Look at your Management Accounts and understand where your liabilities are and what this means for you and your business.

With the various different means of support (specifically here in the UK) you may well have taken CBILS loan, or a Bounce Back loan, you may have received grants from your local authority and ensuring that you know what you owe and who to is really important.

It might sound patronising but I have spoken to business owners who have received grants who thought they needed to be repaid, and others who have taken loans that they thought were grants.

Having a firm grasp on this helps you to understand where you are.

Cashflow is King

Having a good understanding of your cashflow is also useful. If your cashflow is negative is this likely to continue for a prolonged period of time? Is this a temporary situation?

It may be that insolvency isn’t inevitable if you are able to weather short term cashflow issues. Speaking to an Insolvency Practitioner, such as Gareth, will help you to explore your options and understand where you are.

You also need to be realistic about the prospects for recovery and having a good handle on both your management accounts and cashflow helps you to get a realistic picture of where the business is.

It may seem as though things are really bleak but an analysis of your situation could show that you are not in as bad a position as you think.

If things are bad at least you know the facts and you are able to then have meaningful conversations about what to do next.

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Listen to the episode here: 

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Insolvency may be the right option

This may sound counter-intuitive but it may be that the best course of action for you and your family is for the business to end. Whilst there are obviously lots of things to consider and perhaps some difficult discussions to be had, there are examples of family businesses closing and the members of that family going on to do things that provide them with far more enjoyment and well-being in their lives than they had in their family business.

Having a clear understanding of what you want to happen will also help an Insolvency Practitioner to advise you. If the intention is for the business to continue, if possible, they will do all they can to help that happen. If the intention is for it to close, they will be able to advise on the best way to do this too.

It is OK for you to be honest here, I have heard family businesses described as “millstones” around peoples neck and whilst it may not be an entirely comfortable way to deal with that, it could be that insolvency helps to relieve some of the pressure you might be feeling.

There is help out there

Facing financial difficulties can be a hugely stressful and emotional time, but try not to bury your head in the sand. There is help available to you through various charities or compassionate and non-judgemental professionals such as The Insolvency Company.

One of the tips that we share in the show is to seek help as early as you can. If you think that your business may be facing severe financial difficulties, you can reach out to Insolvency Practitioners such as Gareth, or a charity that is there is to provide you with useful guidance to help you to retain control of a situation that you may feel you have no control over.