Tom Booth - business recovery; Losses eliminated, Profits restored, Banks placated, Dragons slain, Arguments settled, Wars won

Leicester, United Kingdom

Venture Capital Specialist

"Planning is an unnatural process; it is much more fun to do something. And the nicest thing about not planning is that failure comes as a complete surprise rather than being preceded by a period of worry and depression."

If you have no debt in your business then the chances are, your business is way less successful than it could have been. Most businesses of any real scale today hold debt on their balance sheet in the form of shareholders or overdraft or other forms of business loan. Occasionally, these creditors can try to drive from the back seat. Usually, the only way to stay in control of a corporate entity, especially a PLC is to perform consistently and to plan; add shareholder value to your business.

Sleep with today's balance sheet next to you in bed - Management accounts are just an opinion. Your balance sheet (provided it is a true and fair reflection of your business, is the only real measure. Everything else is one man's opinion or even guesswork. Failure to monitor the balance sheet can lead to creditors taking control. Often, this happens overnight in an office far removed from your own, by people you will meet for the first time the next morning. Approaching this point, many owners/MD's and CEO's (often including FD's) realise only too late that different experience, skill sets and knowledge are required to turnaround or repair a previously successful business. These skills and this knowledge usually don't exist in the entrepreneur/manager who created it. This applies especially if an insolvent solution proves to be the only remedy.

Over time (if the company doesn't go under beforehand); the balance sheet can become leveraged, operations unviable, trading impaired and suddenly investor relations come under extreme pressure.

A 2% fall in sales, in a 1% ROS business, all things being equal, will eliminate any possibility of positive PBT. Unchanged in such a falling market; cash burn follows immediately followed by erosion of business value and soon a loss of confidence in management by the creditor. In a business with no management accounts, relying on annual audited figures - it can often be a dead body before it crosses the line.

Often at this point (too late) the business will bring in a "consultant" - whereas what it really needs is an insolvency planner and while the "consultant" waddles around trying to get a handle on the business - trust and confidence of the creditors in the management evaporats. An agonising period under "consultancy" follows, where studies are made of dead horses. These horses are flogged, electrocuted, strapped together, skinned, boiled but being dead - they don't improve and by now control of the business effectively transfers to the investor unless it's gone t1ts up while all this was going on.

To maintain your informal licence to operate from your investor or shareholder - you must maintain contact, foster confidence by being in touch with your market and your numbers, demonstrating actions ahead of the curve and avoiding shocks and surprises. Sadly, it's always much easier to do bugger all because planning is an unnatural process; it is much more calming to do what you've always done. The nicest thing about not planning is that failure comes as a complete surprise rather than being preceded by a period of worry and depression.

Case history's - just a few from a huge list of household names. Either Lead, Follow or get out of the bloody way - the world is full of "Consultants", the majority of whom failed in the job and can only hang around in the shadows hoping for another chance, part-time. Get a real operator on the job.................

Lookers, Perrys, Polar, Ford Retail, RBS, Dixons, Stirling Investments , Endless LLP , Interim Partners, Black Horse , Brownhills

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