Bankruptcy remains a big concern for any business that is struggling with its finances. There were just under 4000 new UK company insolvencies in the second quarter of 2018, a scary figure for small businesses who may feel themselves slipping.
One response to the threat of bankruptcy is to get out while you can and sell your business. Initially, it may seem a straightforward choice. You sell the business, probably lose a bit of money in the process, but rid yourself of the constant worry. You free yourself from navigating the complicated world of bankruptcy and are able to start afresh.
Unfortunately, selling a financially unstable business is not always the best choice. A business that is struggling enough to be facing insolvency is unsurprisingly not in high demand. So selling may not always be the quick fix you want it to be.
Have you done all you can?
The first point of call if you’re considering selling your business is to confirm that you have done all you can up to this point. Ensure that you have minimised all possible costs and cut expenses down as much as you are able to.
Some can be too quick to convince themselves that selling is the best move. This way, you may neglect to see the potential to bring yourself out of the struggle and keep your business afloat.
Look through all of your business expenses – be it rent, insurance, equipment costs – and see if there’s any savings to be made. Until you have done this, you can’t accurately assess your financial position. From here you are able to better weigh up the choice between trying to turn your business around or selling it.
Be realistic about your potential for turn-around
It’s best to be realistic about your business’ potential for turn-around. Sure, it may be ideal and somewhat feasible to make some savings and get your business back to making a profit. But is that the realistic choice?
You need to be honest with yourself and lay out all of the facts when making your decision. Try as much as possible to remove your emotions and personal ties to the business from the decision of whether or not to sell. Either choice can be a long and complicated journey so you need to ensure that you are making the right decision for yourself and the business.
If you think your business has the ability to turn its financial situation around and get back to thriving, then that’s great. If not, then maybe it’s time to look into selling.
The struggle to sell
As selling your business is often a direct result of financial struggles, the process isn’t always straight-forward. The financial struggles that are forcing you to sell are also a reason you will likely struggle to make the sale.
Businesses sell and change hands less frequently than other smaller stock. So even a thriving business can be on the market for a while with little, to no, interest. This is why making the decision to sell your business should not be a rushed one. It’ll relieve you of the stresses of bankruptcy once it has gone through, but to get to that point can still be a challenge.
There is a chance you will put your business on the market but not have any interest, either for a long time or none at all. These are circumstances you should take the time to plan for, so you don’t end up in even more trouble should either occur.
If you are able to find a buyer for your business, the price you get may also not be enough to clear all of your existing debts. Selling your business can work to alleviate some of the financial struggles, but may not get you completely out of the woods. It’s best to have some other solutions in the pipeline in case of emergencies.
Selling a business that you have given your all to and been with from the start can seem a little like admitting defeat. It’s worth remembering that it should be a completely personal decision. You can seek professional guidance throughout the process, but the final choice will ultimately come from you.
Selling your business as an alternative to bankruptcy doesn’t have to be a completely negative thing. Getting yourself out from the financial burdens you may have been struggling under for some time can offer a lot of personal relief. It can also allow you time to reassess your business decisions and better plan for a future endeavour. You may be able to take the lessons learned from the experience as motivation and guidelines for a new project.
If your business is suffering then you should seek expert guidance on how to best proceed. Here at Irwin Insolvency we offer friendly advice to get you out of any financial crisis. If you have any questions, get in touch with us today on 0800 009 3173.