We may be only a few weeks into 2013 but already we have seen that the relentless force of the double dip recession is set to continue. High street giants HMV, Blockbuster and Jessops have already fallen victim to the tough financial environment that looms large over the UK economy.
With uncertainty facing many UK businesses, it seems that regardless to how prepared business owners may have felt prior to such hardships, many are now ready to face the worst outcome as it becomes apparent that no one is immune.
The above examples prove that even the most traditional and well established businesses can fall short to out of control business debt, but what is business debt and when is it a problem?
It is natural that with every economic cycle businesses will experience peaks and troughs; however such becomes an issue when financial forecasting is inaccurate and therefore results in increasing amounts of debt that prevents a business from operating efficiently.
The majority of businesses will acquire a certain level of “healthy” business debt at one point of another. For example, such debt will normally come in the form of a business loan or business overdraft that is usually attained as a means to assist business growth, improve start-up cash flow or implement business strategies; however this becomes a problem when a business’s income is no longer sufficient enough to allow them to make repayments.
If this occurs it can be a distressing and difficult time for many business owners who often struggle to come to terms with the financial complications that could result in the closure of their business. Business Debt Management Advice is always recommended during this situation as it can help remove some of the pressures associated with the financial difficulty. Mutual professional advice will provide an objective approach to finding a solution that will best suit the business.
There could be light at the end of the tunnel regardless to how difficult the situation may seem. There are many potential solutions that could be unearthed as a result of a proactive business debt management plan, which in-turn could place the business in a position where it can continue to exist in a sustainable way.
To conclude, external viewpoints are imperative to ensure an unbiased approach to the long-term solution of a business’s financial woes. Such strategy has been proven fruitful when one looks at the recent on-goings of the HMV case study. HMV, whose future looked dim after it announced administration last week, has been recently handed a lifeline after restructuring specialist Hilco have taken effective control of the retailer and its £176m of debt.
About the author: Chris Algar writes on behalf of Business-Debt-Management.co.uk who offers specialist and confidential advice that can help companies facing financial difficulties.