It’s no shock that for every 4 companies that start-up within the first year 1 will have closed, within the first three years 2 will have closed. That’s a 50% chance that a new business will survive past its third year, not a great prospect when it’s your livelyhood on the line.
There are of course plenty of indicators such as the insolvency 3-point checklist which can help a business owner recognise when a business is starting to have problems, but what happens when those problems pop up?
We’ve posted previously about how to approach problems in a positive way, but let’s assume the worst case scenario, your business is faced by unpayable bills, your finances are deeply in the red, what happens next?
If your business is the only income you have then outright closure will be untennable, but there is a solution.
Pre-Pack Administration
By closing your failing business, you can continue to trade within a new business, even possibly beginning the new business with assets of the old, bought for the new business at more affordable costs.
Pre-Pack businesses can help overcome start-up failures but have to be handled in a very specific way in accorance to the legal-boundaries which govern all businesses.
By Trading on within a new company you can;
- retain staff, ensuring the new business has the skills to get going.
- release yourself from bad debts.
- rid yourself obligation of bad contracts.
- retain loyal customers ensuring future income
- retain brand awareness, reduces the costs of ‘start-up’ for the new company.
This is of course not a way to simply illegally remove unfavourable conditions, the laws for closure and company formation all still have to be attended to duely. It is however a good way of ensuring that you can continue trading, continue earning an income and ensure that you as a business owner arent put into a situation which if unchecked could lead as far as court imposed fines or even criminal enquiry.
If you have a failing business, but cannot bear the thought of closure due to loss of income, why not consider investigating a company pre-pack, It could save you thousands of pounds in debt-fee’s and running costs, in the long term ensuring your business flourishes and grows to return even higher income for yourself and anyone you employ.
Don’t Bury Your Head…
When problems start popping up, don’t hide from them, don’t ignore them, even when the problems mean that your curent business has to close. Simply recognise what has to be done and then take the steps to move on. Business debt can be worrying, stressful and even seem overwhelming, but the problems wont go away simply if you choose to ignore them.
If you need any advise about anything in this article, just get in touch with one of our advisors and have a chat, we’re here to help.
