In most cases the failure of a business is treated as a personal failure. Your ego may stand in the way of taking the necessary actions to try and resolve your financial predicament, especially when creditors are knocking on your door every day. There is light at the end of the tunnel if you take action and you may still be able to rescue your business. This article will show you 5 steps you can take starting today to help recover your business.

1. Cease Trading

As long as you are trading then creditors will assume you are bringing money in and will expect to get paid. Ceasing trading as soon as you become aware your business is facing financial difficulty protects you from charges of business misconduct as well as keeping creditors at bay. Ceasing trading consists of the following:

• Stop taking new orders
  

• Stop signing any new contracts
  

• Avoid creating new debt
  

• Shutting down all operations
  

Notifying the HMRC (to prevent tax hell) and all your creditors are all part of ceasing trading and this can be accomplished by sending an email to ALL creditors and contacting HMRC by telephone. Explain to your creditors what you are doing (attempting recovery or voluntary windup).

1. Get Professional Assistance

Taking the first step of acknowledging your business is in trouble is the hardest. After communicating your position to your creditors and the HMRC you need to schedule a consultation with an Insolvency Practitioner. IP’s usually offer free consultations so you do not really have anything to lose. At this point you need professional assistance to help you make an assessment of your business position and help with coming up with options.

1. Consider a Company Voluntary Arrangement (CVA)

One of the options your consultations with the Insolvency practitioner may suggest is approaching your creditors formally through a CVA. The advantage of a CVA over informal agreements with creditors is that it is a formal agreement with enhanced chances of success. A feature of the CVA is negotiated affordable monthly repayments which will increase your chances of reviving your business, while still keeping your creditors happy.

1. Emergency Funding?

Even when your business is struggling financially, it is worth the effort to search around for alternative sources of financing to rescue your business. There are companies specializing in providing credit to businesses with poor credit, of course their terms and interest rates may be higher so you need to be very careful. Other sources of emergency finance could be:

• Invoice discounting
• Small business grants
• Loans secured against personal assets

1. Voluntary Liquidation

Depending on your future business plans, and whether the previous options are available to you, there is always voluntary liquidation. With voluntary liquidation you agree to sell business stock and assets to repay your creditors (called a creditor’s voluntary liquidation). A pre-packaged administration sale will offer any company directors capable of paying fair-value for the assets the opportunity to do so. This will make creditors realize you are taking action to pay down your debts leading to less demands for payment.

Following these 5 steps will help you resolve your current financial situation with your business. Burying your head in the sand could have disastrous consequences, both personally and for your business reputation. Take action today and seek professional help.