Ian Walker – Minimising Risk
It is not all doom and gloom when it comes to the assumed failure of a business. As we furrow deeper into this time of economic and personal uncertainty, worries and fears are rife but we need to stay strong, hold our nerve and take advice. As the coronavirus pandemic continues to surge throughout the world, many business owners are in a state of panic but rescue and recovery expert Ian Walker, of Begbies Traynor, Exeter, tells those owners what they can do to minimise risk.
With over forty years of experience saving businesses, Ian is well-equipped to reassure and advise, being a chartered accountant and licensed insolvency practitioner and having dealt with all types of insolvency and at least three recessions. Ian said:
“The earlier that owners of a business or directors of a company take proper professional advice, the more options they have got. In the past, they could always turn to advice from their local bank manager but those sort of people really don’t exist anymore.
More importantly, the other ‘friend’ of the business director always used to be his accountant. Nowadays, many directors feel they are not willing to pay for proper accountancy advice and turn instead to ‘the cloud’. However, they must learn how to use their accounting package properly because, otherwise, the old adage of ‘garbage in, garbage out’ inevitably holds true.”
“If you change the supplier of a particular product or eliminate a cost, you need to know what affect that has on your bottom line and it’s pointless waiting two years until the next statutory accounts come out, so you really do need to have a system that will enable you to see how the business is doing on a day-to-day basis.
Now, if you’re struggling in both those regards and you don’t have a friendly bank manager or an accountant, if you start to have problems, you must talk to someone like me. I can go in, identify what the problems are and point you in the right direction. The cost, by and large, is minimal, if any at all, and I am more than happy to give advice to directors on a pro-bono basis.”
Minimise Risk Through Change Says Ian
A scenario Ian sees regularly is when directors of very viable businesses have been unable to identify the causes of their problems and, instead, pour money at it, in the hope that this will sort the problem: invariably it doesn’t. If the director has spent all their available funds, and often more, propping up the failing business then there is little chance that it can be saved.
So, when is the best time to speak to an insolvency practitioner?
“Really, as soon as the director or owner realises that there is a problem. A company declines over time. It’s really quite simple – the sooner you address the problems, the more options are available.
If you approach a business at an early enough stage, that business can, indeed, invariably be turned around. It may be that you axe certain products or certain lines or you reduce stock or you borrow a bit more money in order to achieve certain specific goals, that is a true turnaround situation.
Some of the most successful clients I’ve had are businesses I’ve been in touch with over two or three years and I’ve given them advice, they’ve reacted to that advice and, ultimately, those businesses have survived.”
Ian has seen a multitude of companies come and go over the years and he cannot emphasise the importance of change enough.
“The business environment has changed dramatically over the last 20 or 30 years and a personal adage of mine is ‘The only business that is going to survive long-term is one that can react to change’ and the one thing we know is that change is everywhere nowadays. You have to be able to change quickly and nimbly, and perhaps creatively, if you are going to survive.
If you can’t change quickly enough, if you can at least learn a lesson, perhaps if the business can’t survive and you have learned by those lessons, you may be able to start up again and move forward.”
Realise Strengths And Weaknesses
A vital attribute for business owners is to admit and realise their strengths and weaknesses in equal measures, according to Ian.
“As far as I’m concerned if you are running a business, you have to recognise your own shortcomings. A director who is probably very good at making or selling widgets, the basis on which they have formed the business, must also recognise if their management skills are poor, ensuring that lack of knowledge is rectified by employing the right people is crucial.
As a business starting up and growing, you will use other third parties to assist you, so the key is to employ an accountant to put in the sort of management information system that is relevant to your business and that enables you to see how your business is going from day to day.”
“You also need to be able to know what a business has been achieving in order to try to predict what the business is going to do in the future, particularly in these uncertain times. Certainly, if you’re in need of cash and you want to go to a bank to borrow more money to expand, the one bit of information which is absolutely vital is some sort of forecast. Trying to predict what that company is going to do in the future. And the only way of predicting the future is by looking at what has happened in the past and adjusting it accordingly.
So, a director needs to have a management system to be able to see when things start to go wrong and to react quickly. And if that director thinks things are about to happen that they have got no control over, that is the time to go and talk to somebody else.”
Ian’s summary is that there can be light at the end of the tunnel so long as you get the right advice early.
“The right insolvency practitioner is probably key because we are not all harbingers of doom and gloom, we don’t simply wind a business up. My main concern for a business is that its directors – and indeed its employees and creditors – get the right advice, and I’m happy to give that advice on a pro bono basis, because, very often, a business that is ailing simply cannot afford to get that quality of advice.”
Written by Kate Williams
Photos by Rob Coombe