HomeFWJ TakeawayCompany rescueBusiness recovery and rescueWhat causes business failure?

In many cases there is a gradual and almost imperceptible decline that business owners considering how to overcome business failure might miss, which can then lead to more serious problems and the need for business recovery and company rescue.

Cash flow issues

Poor cash flow management is often a key reason for what causes business failure.

We are often asked how can poor cash flow affect a business?

  • Cash flow is always key to a business.
  • A positive cash flow position is imperative for any business recovery, as even with a healthy balance sheet, if a business is unable to pay its staff and creditors on time the business recovery will experience how poor cash flow affects a business first hand, and will inevitably find itself dealing with business failure.

Late payments from customers are often one of the primary reasons businesses are unable to pay their own creditors on time and it is important that the person in charge of collecting payment is good at their job and well rewarded to ensure cash flow keeps moving. This becomes more vital during a company restructuring/business turnaround to effect a company rescue situation.

Ineffective management

One of the other main causes of business failure is not having the right team in place. A key cause of business failure leading to the need for company rescue is if the business does not have correctly focussed, skilled and trained management in place. It may be in order to prevent business failure that a business should bring in outside support from an independent business rescue expert with first-hand experience of company restructuring and business turnaround who can advise.

Failing to keep moving forward

Other causes of business failure could be a lack of strategic thinking by management. Management who are firefighting can lose focus on the bigger picture when considering how can I save my struggling business? They will therefore often fail to delegate day to day tasks which distract from a wider business turnaround focus.

If you believe that your business may be at risk of failing, it is imperative you act quickly and take business rescue expert advice at the earliest signs. At Francis Wilks & Jones we have an expert team in place with a vast range of experience on business recovery strategies and debt collection for businesses of all types. If your business is viable, with the right help from a business rescue expert and the right business recovery strategy in place, most issues can be resolved. Contact the team at Francis Wilks & Jones today.

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