A Life In Numbers

We’ve recently closed a funding round of just under £2m for a client and it struck me that with all the negative press around it’s easy to assume that all the positive growth stories have dried up. This tends to lead people to think that the time is not right to take action and consequently they put their head down and hope all the nasty stuff goes away. In their minds they tell themselves that they’ll start taking more action when the time is right.

It’s true that many more businesses are becoming insolvent and going into Administration. And many more may be trading insolvently (a criminal offence with personal liabilities) without even knowing it. It’s also true that there are many more people going into personal bankruptcy or IVA (Individual Voluntary Arrangements) in the false belief that after 2 years this will be wiped from the records (check any mortgage application for the question that says (have you ever been made bankrupt or entered into an IVA) to see that your credit record may never fully recover.

However, amongst all this there are still some companies that are raising money, expanding and growing as fast as ever. Admittedly it’s not easy and has the potential to get harder in the coming year but with the right guidance and the right business plan there’s still a huge amount of opportunity in the market.

The investment community is still sitting on considerable cash reserves and there’s more demand than ever for the right deals. This is balanced by an even higher level of paranoia and focus on cashflow that requires the investors to have a huge amount of faith in the abilities and plans of the management team but a strong team and a coherent plan can win through and the extra focus is on the right things.

Even the banks are willing to help those businesses who can clearly show they know what they are doing, keep the bank fully informed and manage their finances tightly.

Any business owner in this market has to make some tough decisions right now. You must know where they stand financially right now and for the foreseable future. If you don’t know that then you’re treading a very dangerous path that could lead to losing everything you have, including your personal assets.

Next, you need to decide where you want the business to go. Are you going to just knuckle down and tough out the the current market conditions or are you going to look at whether there are changes to be made to the business and strategy that could take you into new markets and consolidate and strengthen your current customer base?

Whichever direction you choose you will have to take some action. The most essential factor you’ll have to manage right now is your cash and that may mean some hard decisions such as reducing costs. You’ll also have to look at your business critically and understand what is working and what’s not. The absolute worst thing to do right now is to freeze like a rabbit in the headlights and wait to get run into the road.

This has turned into more of a motivational rant than I was planning but it would be really sad to see even more companies fail because they were waiting for when the time is right. Because, frankly, the time is right now.