5th June 2019
Insolvency Practitioner Siann Huntley ‐ from the Cardiff office of Leonard Curtis Business Solutions Group, providers of the Lifecycle network ‐ talks business rescue and recovery and lessons everyone should learn.
Every day, Lifecycle enables accountants to expand their core service offering with the specialist services that their clients need to overcome key issues affecting businesses today. The questions that we most frequently ask accountants and their clients include:
− Are you making money?
− What’s the impact of business disputes?
− Benefits of youth versus experience?
− Are you retaining the right people?
− Are you well placed to manage media scrutiny?
− How can we get the best deal for all?
Siann also looks at what creates a business failure and why seemingly decent businesses encounter difficulties. Often, it seems, the problems lie within. But recognising issues ‐ and then quickly taking the necessary steps to overcome them ‐ is crucial.
We’ve seen it all at Leonard Curtis
When it comes to business difficulties and failure, there are many factors in play. It could be poor management, the quality of staff, wrong folk in the wrong jobs, or being undercut by competitors.
We often find that companies aren’t charging enough for their products and services or paying over the odds to key suppliers. Whichever it is, we really have seen pretty much every scenario going.
And as all accountants know, it always boils down to the simple principles of balance ‐ what’s coming in versus what’s going out and does that stack up? If not, why not?
Here’s our round up of key questions to ask clients and some of the simple steps to take that can help overcome issues before they escalate.
1. Are you making any money?
This is usually the first question we ask business owners and their advisers who come to us for help and a surprisingly high percentage say they don’t know. It’s obviously a straightforward balance sheet issue, but it is often the case that the tail is simply wagging the dog.
So, a meaty, all‐consuming contract ends up making a loss, or high cost suppliers and bargain‐hungry customers put the squeeze on profit. Either way there is a lack of control, with too much focus on product and not nearly enough on management structures. This of course is a red flag moment for all businesses and those advising them. Why are they losing money and what needs to change?
2. What’s the impact of business disputes?
Business disputes are never good news. Disagreements and falling out puts immense pressure on management and can often be the catalyst for an insolvency. So, if there is a disagreement followed by opposition to something important in your business, try and resolve the reasons for the discord as soon as you can before it escalates.
3. The benefits of youth versus experience?
While it is true that you don’t necessarily need years of experience to start a profitable business ‐ the website www.startups.co.uk is full of such success stories ‐ business owners do need experience to spot when things start to go wrong and be able to act quickly. Or indeed they need to have the right accountant and other advisers around them to help them do so.
It’s even more important for those highly successful entrepreneurial clients who have built up a sizeable empire where, when a mistake is made, the percentage loss is significant and often very hard to turn around.
We sometimes say to our members and their clients who are multi‐generational family businesses, listen to elders. Previous generations may no longer be in charge day to day, but they do usually have a weather eye on the bottom line and are sure to have seen similar scenarios in the past. Use their experience. They have grey hair and wrinkles for a reason.
4. Are you retaining the right people?
It’s always good if clients can keep great employees in the business. Whenever we can, we try to make them part of a successful recovery story ‐ redeploying them in a stronger management set up.
So, if we are selling or merging businesses, we take the best of both to create something different, which is more sustainable for the long term. Working with accountants and other advisers to save jobs and improving the future prospects of a company are definitely the most satisfying parts of my role at Leonard Curtis.
5. Are you well placed to manage media scrutiny?
While most deals go by unnoticed, there are times when our work ‐ and that of our accountant partners and the clients they work for ‐ is in the spotlight.
Media interest in an apparently failing business can change the dynamic before you have even begun. I have learnt the value of having a pretty robust media liaison strategy and I think we are getting better at it.
Media interest is always a double‐edged sword. While it can rock the boat on occasion, most of the time that sort of attention makes an asset more valuable, which is hopefully good news for creditors and employees.
6. How can we get the best deal for all?
Ultimately, you have to look at what’s important in difficult circumstances, whether your client is a construction contractor in Newport restructuring their business under the radar, a farm in Pembrokeshire or a world‐leading tech brand with all eyes on every step, we always do everything we can to safeguard livelihoods, create future value and to get the best deal for all.