Leading professionals concerned that companies that could potentially survive & thrive are being put down unnecessarily. With quantitative easing now confirmed, what will the long term effects be?
Recession, rising unemployment, bad debts, CCJs and administrations seems to be all we hear about, no wonder levels of corporate stress are at their peak. National Turnaround experts Dr Harry Moore and Stephen Moon of Moore Fleming are appalled that many businesses are being given the wrong advice.
Ive been turning businesses of all sizes around for the last 30 years and Ive never seen anything like this. Im disgusted that so many traditional and worthy businesses are being put down when they have the potential to be rescued, commented Dr Harry Moore.
Dr Moore, a nationally recognised Turnaround Practitioner and ex principal at KPMG, suggests that many businesses are being stripped of their assets unnecessarily through disposals when with a bit more effort they could be saved.
Its scary out there, many directors have never experienced anything like this before but theyre taking action when its too late and crying on the wrong shoulders. We see numerous examples of SMEs in particular being ripped off with misleading advice.
Leading Turnaround Practitioner Stephen Moon suggests, Previously thriving businesses are now facing an uncertain future, but a down turn in trading and a few bad debts does not justify a company being shut down. 83% of all businesses we work with survive and thrive. However, the fact that weve now entered the realm of quantitative easing, has two negative effects for businesses 1) it confirms that things really are that bad which knocks confidence yet again, and 2) it gives concerns about a future surge in inflation and further devaluation of the pound. Were in real danger here of the confidence levels being crushed, causing yet more businesses to fail.
Insolvency statistics suggest that administrations are up 251% on the same period last year and the Bank of England revealed that unemployment is likely to rise above 3 million in the current recession. With confidence still in freefall, things are likely to get worse, and businesses need real direct help, not open promises.
Many businesses are unsure of whom to turn to in these unsteady times. Turnaround advice should be the first port of call and must be taken as early as possible. The warning signs are there. Any consistent reduction of cash availability means its time to start seeking advice. Our experience over recent months shows that the banks arent taking any risks. They are currently taking measures to reduce their lending instead of increasing it, so the governments plans to increase liquidity arent working. says Stephen Moon.
Businesses need cash and change. There are alternative sources of finance out there, other than the banks. Harry Moore established niche consultancy company Moore Fleming ten years ago, We have been inundated with individuals of high net worth looking to invest in businesses with financial difficulties that have the potential for growth. Unfortunately by the time we get to some of them they have been sold the idea of a Prepack, the latest name for a Phoenix, only to find that when it comes to the crunch, the company goes into administration. This can turn into an asset stripping bun fight and the employees stand to lose everything.
There seems to be a missing link between people with money looking to invest and businesses that need an urgent cash injection. However, financing through a so-called insolvent financial reconstruction of the balance sheet is highly likely to take the company back into resuscitation. Turnaround needs two things; money and management, and management has to adapt and change. This means thinking laterally, being innovative and being aggressive about costs and sales.
Dr Moores own methods of turnaround are indeed innovative. They include taking chief executives on hikes across the Yorkshire Dales where they discuss strategy and options in a phone and hassle free environment and talk as they walk.
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