Setting up and running your own business takes blood, sweat and tears… and some liabilities or risks.

Most small business owners get carried away with managing the day to day trading of the business and fail to take a step back and see the overall financial health of the company--- more often than not it’s too late for business owners to realise that the company is drowning in debt and they find themselves asking… “How do I get out of this mess?”

If you find yourself asking this question, here are a few ways in which you can get out of this sticky situation:

1. Sell company assets

Downsize. This is a good time to re-assess the company’s operations and review the company’s asset listing and decide what significant assets you can let go without affecting the operation or profitability of the business.

2. Opportunity for growth if “fresh” equity or debt is injected

Before you audition for Shark Tank or asking your mates to invest in your company, you need to at least answer the following:

      • What is my break-even point?
      • What is my historical growth rate?
      • What are the trigger points of the business?
      • Should I seek a debt arrangement or raise equity?
      • Is my intellectual property protected?

A full assessment of the over-all financial health of the Company and its capacity to grow are critical at this stage. Otherwise, you may just be dragging your mates or yourself into a bigger hole than you are currently in.

3. Sell the business

This is very heartbreaking for most, if not all, small business owners. However, not is all lost because the brand, which you have worked hard to establish, may be preserved.  Also, in certain circumstances, the purchaser of the business may want to have you on board as an employee or consultant as you, of all people, know the business operation well and have the relationship with key customers and suppliers.

4. Consider a change in management

Management needs to understand that businesses must adopt to the changes in its industry in order to stay competitive and increase its revenues or reduce its operating costs-- whether it be changes in management style, utilising new technology or even getting into the crazy world of social media! If management refuses to understand and implement these changes, then you might want to consider an intervention to keep up with or better still get ahead of the market!

5. Seek help from a specialist

Depending on the company’s situation, a specialist can tailor a more appropriate strategy in dealing with the financial situation or constraints the company may have and help reduce your personal exposure as the director of the company and better still—reward your blood, sweat and tears. Note that the key is getting the advice early.

As the saying goes, “Defer not till tomorrow what may be done today”

Contact Veritas Advisory today should you need assistance in managing your company’s outstanding liabilities before it’s too late.

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