Running a business can take up an inordinate amount of time, dedication and energy in order to be successful. There is always a danger of being distracted and losing sight of important business aspects.
We spoke to Lauren Cullen, a Licensed Insolvency Practitioner, to share her unique perspective on running a successful business. With over 13 years of experience in the industry, she has worked closely with many companies that have regrettably failed and required an insolvency procedure. However, she has also worked with a large number of companies that have been highly successful and used a solvent liquidation in order to release reserves to shareholders in a tax-efficient manner.
Here are Lauren's five critical areas that all business owners should monitor.
Knowing how much you have in your account is essential to keep a healthy cash flow. There are bound to be times when cash flow is tight but if this becomes a regular occurrence then you need to seriously consider your options.
Alarm bells should ring if:
More reading: how can I maintain a good cash position?
Getting paid by customers is key to the survival of a business and I have seen all too often the knock-on effect of bad debts, normally when a business is overly reliant on one customer. Debt collection is a vast subject in its own right and too large to give it justice in this article, but here are some brief points to consider:
More reading: how should I chase customers for payment?
Paying creditors as they fall due should be the routine, but on occasion, this can prove difficult and it can be easy to fall behind.
More reading: how do I operate payroll?
Not paying staff on time can be the final nail in the coffin for some businesses so remember - happy and content staff leads to more productivity and greater profits.
It is easy to fall behind on filing returns with and paying HMRC. Especially if you are trying to juggle everything and have tried to save money by not employing an accountant.
My suggestions are to:
Running any business is a management exercise on a monumental scale so regular reviews need to be conducted.
More reading: how do I measure success and growth?
As a Licensed Insolvency Practitioner, I’ve seen all too often business owners seeking advice much too late. Unfortunately, this often results in leaving no option but to close the business down. In the case of a limited company this would be a liquidation, but for sole traders and partnerships, the individuals, in turn, will find themselves needing formal insolvency procedures, at times going bankrupt.
Guidance must be sought at an early stage. Although the name may not suggest it, in recent years Insolvency Practitioners have been spending more of their time assisting in turning around and restructuring businesses, rather than just closing them.
Lauren Cullen is an AAT Licensed Insolvency Practioner. If you have any concerns about your business, speak with your accountant or feel free to contact Cullen & Co for free and confidential initial advice on 0203 8877 200 or Lauren@cullenco.co.uk
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