How SMEs can avoid bankruptcy
Avoiding bankruptcy proved to be too difficult for thousands of small businesses during the financial crisis, but as the economy recovers, those still trading will want to ensure they don’t suffer a similar fate.
Recognising the mistakes made by those that fail is an essential part of the process, meaning that they can be prevented from happening again in the future.
Given that an estimated 100,000 SMEs collapsed in the five years following 2008, finding the root of the problem is vital.
The foundations of many problems stem from poor financial management, a lack of planning ahead and a general lack of understanding when it comes to figures.
Being aware of other solutions is also important, as various business recovery methods could be used to ensure that bankruptcy is most definitely a last resort.
Cutting costs can help to ease the burden placed on the finances of many businesses, from saving on energy to removing unnecessary expenditure.
The Carbon Trust estimates that UK businesses could save £300 million every year by reducing their energy use, providing additional funds to tackle other areas of a business.
One fundamental aspect of this is simply to make businesses aware of potential savings – even from something as simple as switching off the lights.
Having energy-efficient equipment also reduces costs in the long run as it reduces the levels of energy required in the office or workplace environment.
Having the correct techniques in place to deal with internet traffic and online sales is also important, as the online world is becoming an imperative part of a business.
This includes having content that appeals to customers and that will attract visitors to a site, therefore increasing the profile of both a brand and the products concerned.
The online marketplace can be easily overlooked but it holds plenty of options, especially as far as marketing, advertising and sales are concerned.
Many of these aspects of business can be done at relatively low cost if done in the right way, enabling firms to concern themselves with finances and expansion, rather than potential insolvency.
By Phil Smith