Corporate recovery and insolvency advice could benefit as many as 80% of UK businesses, this is the percentage of companies that face some form of financial difficulty in their life cycle. There are a million and one factors that can affect a company’s financial well being, which can include anything from the external issues of a poor economic climate, to a poor business strategy. Here are the top causes behind business bankruptcy.
1) External conditions outside of the business, like an increase in the costs associated with running a business, a new competitor opening down the road or some sort of act of god like a flood or fire. There is little you can do to avoid these things happening, except adjust the internal factors taking place in your business accordingly.
2) Internal business conditions that can be controlled, such as bad location, an unbalanced client portfolio and weak management. These factors can be adjusted, if your premises are in the wrong location then move. If you rely on clients from one major industry or have one client that generates 80% of your revenue, have a think about how vulnerable this makes your business. If that industry sector hits problems or your one major client goes under – you could too!
3) Tax related issues are a vey common area of concern, particularly to smaller business owners who perhaps don’t have the processes in place for tax to be managed via automated systems and undertake tax management manually or in their heads! This can result in hefty amounts being owed either in income tax, employee related taxes or VAT, as the money gets spent on other things and the tax bills begin to come in thick and fast. At tri group we have corporate recovery tax specialists who can help you with this.
4) Financial problems, for instance a sudden loss or withdrawal of capital or funding. It is not uncommon for banks to recall lending in today’s economic climate. A classic example of this was the recent recall of a major bank from the famous chef Gordon Ramsay, who was forced to close restaurants. The inability to secure new capital when it is needed can often also result in company bankruptcy, as can cash flow difficulties – for example if outgoings remain the same or increase and a handful of major clients default on payments because of their own financial adversity.
If you think your business may be at threat from any of these factors, why not give tri group a call and benefit from our specialist corporate recovery and insolvency advice – it could save your company, your pride and all the hard work and cash you have invested in your business over the time you have been in business.