Running or managing a business takes a blend of passion, enthusiasm, work, empathy, and crucially – dispassionate pragmatism.

So, the answer is: Invariably! As soon as something feels uncomfortable, you should ask for help.

Too many business owners ask for help too late. The unfortunate result is that there is nothing that can be done.

Simply, time and tide waits for no-one and the same is true for a business in trouble!

What starts as a few issues can soon become a wave of issues, and quickly that wave can build and overwhelm everything.

Of course, not every business can or even should be saved. But many can – even if it involves the prudent use of an insolvency practitioner. 

Let’s talk about the elephant in the room… Insolvency.

A business is insolvent when it has more liabilities than assets. Simply, it cannot pay its bills as they fall due and crucially has little or no likelihood of being able to do so in the near future.

What most business owners don’t know is that this may, or not, be the end of the business.

Unfortunately too often, it is just too late to save what is an underlying viable business. It just needed re-structuring into shape, before it got this far down the path.

If a business enters insolvency without a plan, invariably it is the end of it! So the best plan is to understand what needs to be done before a business runs out of room or time to act.

Can you tell that the message is don’t sleepwalk into oblivion?

Act quickly and decisively. Don’t just hope it’s going to get better, because a lot of the time, it doesn’t!

What does restructuring a business look like? 

Firstly, look at the basic business.
● Is there still a market for the product and services the business offers?
● Is there the money in the market to pay for it?
● Has something happened to the market that we can do anything about?
● Is the business efficient?
● Are we spending money on things that don’t contribute?
● Can we cut costs and still maintain productivity?
● Are we taking too much out of the business? Is our lifestyle killing the business?
● Have we got the funds to effect a rescue even if there is one?

Secondly, look at the debt.
● Can we afford our liabilities?
● Can we ever see the business paying back the loans?
● What is the security on the loans? PG’s, Debentures, Charges, Liens
● Are the key assets owned by the business? Or by the security we have given?

Once we have a picture, we know if we have something to work with or if we don’t…

Sounds harsh but the truth can be painful. Regardless, the truth is the truth, and knowing that is crucial at this stage. Dispassionate pragmatism.

So, hopefully the basic underlying business is sound, but needs to get into shape. The next set of questions is all about whether the actual vehicle that owns the business (the Limited company) is viable or just too damaged to continue.

This is a whole big bag of questions, but effectively it involves the debt burden the Limited Company is carrying, and the viability to repay… In this case we must act in the best interests of all stakeholders:

● The banks or lenders
● HMRC
● The employees
● The suppliers
● The customers
● The landlords
● The shareholders

We must determine what is the best overall outcome for everyone. Do we stagger on getting weaker? Can we trim costs and come up with a plan and recover? Do we hope for the best?
Do we close the company, appoint an Insolvency Practitioner, and effectively go Bust (Liquidate)? Or, do we look to go for a full business restructure and offer a payment of so
many pennies in the pound to our creditors (what’s called a creditors arrangement), or even
a closure of that limited company and seek to buy the business assets from the liquidator and start again?

As you can imagine all of this can be tricky, emotional, and far from certain…

What I can tell you is that without a doubt the more time you can give to navigate and consider and explore the problems the better the chances are of a better outcome.

So the answer to the basic question of “When is the right time to ask for help?”

As soon as possible!