Tim Mortimer, the subject of our main feature, was lucky, or rather he acted sensibly at a time when many businessmen lose their wits altogether. Through a combination of swift action to cut costs and rapid replacement of lost business, which boosted income, he managed to turn his business around. His contracts had long notice periods, which gave him time to sort things out. If you don't have that luxury...
Remember that you are not alone
Roughly 12,000 or 0.7 per cent of active companies went into liquidation last year. Where once it was a mark of deep shame, increasingly it is seen as an unfortunate occupational hazard.
Know when you are beaten
All businesses have periodic crises, some of their own making, others caused by outside factors. The problem is spotting when a 'periodic crisis' turns into terminal decline, because it is at that point your problems cease to be purely commercial and become legal.
Be decisive
The sad thing is, say experts, that for many businesspeople, liquidation was not inevitable and could have been avoided, if only they had acted more promptly. “Take advice as soon as you realise that your difficulties are not simply the swings and roundabouts of ordinary trading,” says Hamish Anderson, senior insolvency partner at solicitors Norton Rose.
When in a hole...
You are allowed to trade if you can't pay your bills. But directors become personally liable for debts even in limited liability companies if they continue to run up bills after they know that liquidation is inevitable. Not only can they be pursued for all debts incurred after that point, in extreme cases they can go to jail under laws against fraudulent trading.
Know thyself
Be aware that wishful thinking, pride, shame, denial, depression and fear all mean that it can be very hard, especially for owners of smaller businesses, to admit that they are in difficulties and that they need help. However, such emotions can make you appear to outsiders as shifty, evasive, dishonest and untrustworthy and bring about what you fear most.
Take credit where credit's due
Remember that most creditors are reasonable and don't want to lose a customer, says Patrick Cook, head of insolvency practice at solicitors Osborne Clarke. They only pull the plug as a last resort, so be open and keep talking.
Prepare for the resurrection
It's one of the characteristics of entrepreneurs that they tend to bounce back, frequently in the same industry, sometimes in the same company. The 2002 Enterprise Act allows bankrupts who are not reckless to be given the chance of a 'Fresh Start'. If they co-operate with the Official Receiver they will be discharged from their debts and released.
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