It’s easy to lose track of things, especially when you are really busy and it would be a rare business owner indeed who hadn’t gone through difficult times.
So if you find your business in difficulty then what are your options?
The first thing to say is that it’s not a time to panic or bury your head in the sand. Panicking results in rushed and probably incorrect decisions and of course burying your head leads to no decisions at all.
What you actually need to do is to understand the problem, understand your options and then take action.
The sooner you do this then the more options you will have.
It is also important to remember that if you are company director then you have legal responsibilities to act properly in regards to your business, your shareholders and your creditors.
Understanding the problem
This is the first step on getting your building business back on the road.
If you are able then you need to get your books up to date, if not then pay a bookkeeper to come in and get things in order. Bookkeepers are much less expensive than accountants and you should be doing this anyway.
Secondly, you need to speak with an advisor. If you have an accountant already then this is probably the best place to start.
The depth of the problem will dictate where you go next.
If you are concerned that you aren’t quite making the profits you expected then you need to make sure that you are getting the support you need from your accountant and might have to change or engage with a finance professional that will be able to let you know what is going on monthly rather than annually.
If you are profitable but just experiencing a little bit of cash flow difficulty then the steps above are also valid but you need to be careful that the cash issue isn’t more deep seated and long term.
The building game is a difficult one to master with large amounts of cash going out on supplies and sub-contractors and only stage payments from customers to keep the wheels turning.
Keeping suppliers onside whilst you complete a job and finally collect the money owed by the client is a key skill for the building company owner and it’s something that really only comes with experience.
If you have started to receive legal documents such as County Court summonses or winding up orders then you need to act really quickly and you probably need advice from an insolvency practitioner(IP).
What does an insolvency practitioner do?
Insolvency practitioners are licenced, qualified people who understand the mechanics of business but also the legal implications.
Getting a good IP on board early on will increase the number of options your building business has at its disposal.
The first thing they will do is speak with the directors and get an outline understanding of the scale and urgency of the problem.
It’s possible that they may simply suggest some business turnaround work but it is also possible that they may need to look into things in a bit more detail.
An IP has a structured way of working that means each case is dealt with professionally ensuring the best outcome possible.
The IP will take a detailed look at the debts the business has, it’s assets, income stream and expenses and they will be able to build a picture pretty quickly.
At this point, they will speak with the directors and recommend a course of action.
These could range from an arrangement with creditors, a voluntary administration followed by a pre-pack or indeed a full liquidation but with every case being different it will be extremely important to get that in-depth knowledge on board.
Although it may seem that everything is bleak when you are in difficulties, in fact, there are positive approaches that in turn provide a positive outcome.
Your next step
We’ve seen that there are three things a building business needs to do when the directors think it may be in trouble; understand the problem, understand the options and then take action.
Getting people involved who can take a professional, independent view will give you understanding and lead to you having a range of options.
All you need to do now is to make sure that you take action.