HomeFWJ TakeawayResourcesHow can you prevent a business from failing?

We are sometimes asked by directors – how do you prevent a business from failing? This very much depends on why the business is failing in the first place, but we set out below some of the main reasons that we at Francis Wilks & Jones see most frequently from companies requiring business rescue.

Avoiding formal insolvency processes

Prevention of business failure usually means avoiding a company going into a formal company insolvency process, such as administration or liquidation. There are many ways to avoid business failure and this depends on what the issues are . While there are usually signs a business will fail, in many cases this happens slowly over time, and business owners considering how to overcome business failure may miss the signs a business will fail until its too late, which can then lead to the need for business recovery and company rescue, and sometimes even a formal insolvency process. We set out below some of the reasons for what causes business failure with a need for company rescue.

The vital role of good management

A key cause of the need for company rescue is when the business does not have the correct management in place. When considering how can a business avoid failure, assess the management team to ensure they are fully aware of the needs and aims of the business requiring business turnaround, and are capable of setting clear achievable goals. Managers in a business turnaround may need to delegate more in order to focus on the priorities of the business recovery and company rescue. Get someone to hold managers accountable on a regular basis, for example an external business rescue expert. It is crucial to the success of a business turnaround plan to have the right team. It may be advantageous to bring in outside support from a business rescue expert with first-hand experience of company restructuring and business turnaround in your sector.

The importance of good cash flow

You should consider how do you handle a cash flow shortage, and therefore how do you prevent a business from failing. Prepare a strategy for how to handle a cash flow shortage. If you are already prepared on how to handle a cash flow shortage, and have a good business recovery strategy in place, you can much more likely to be successful in an effective business turnaround and company rescue. Taking control of cash flow is crucial in considering how can you prevent a business from failing.

Know your market and your customers

A key turnaround strategy for business in crisis is to understand your customer and be clear on what you can do for them. In a company rescue situation try to innovate and differentiate from your competitors.


As you can see from the above, there are many ways in which you can answer the problem of how can you prevent a business from failing. These are just some of the issues that often arise in a company rescue. At Francis Wilks & Jones we can talk our business rescue experts can review the options for your business to consider how you can prevent a business from failing.

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