What should I NOT do when my business is in trouble?

When your business is in trouble, certain actions can transform difficult circumstances into catastrophic personal and legal consequences. First and most important: do not ignore the problem hoping it will resolve itself—burying your head in the sand while debts mount and creditor patience expires only reduces your options and increases ultimate losses for everyone including yourself. Do not hide financial problems from co-directors, your spouse, or key stakeholders who need to know—transparency is both legally required and practically essential, while secrecy breeds worse problems when truth eventually emerges. Do not continue taking on new orders, signing contracts, or incurring debts when you know you probably cannot fulfill obligations or pay creditors—this is wrongful trading and creates personal liability for losses you cause after the point you should have stopped. Do not pay yourself, connected parties, or preferred creditors while ignoring other creditors—this constitutes unlawful preference that liquidators can reverse, and it demonstrates prioritizing personal interests over creditors. Do not dispose of company assets at undervalue, transfer assets to family members or other companies, or hide assets to keep them from creditors—this is misconduct that can result in personal liability, disqualification, and criminal prosecution. Do not destroy, alter, or conceal financial records—maintaining accurate books is a legal duty, and destroying evidence suggests consciousness of guilt and dramatically worsens any investigation. Do not make false statements to creditors, banks, or professional advisers about your financial position—lying may provide temporary relief but will be discovered and destroys any chance of negotiating cooperative solutions. Do not sign personal guarantees or pledge personal assets as security for new borrowing when you already know the business is likely insolvent—this converts company problems into personal catastrophe without solving underlying issues. Do not borrow from increasingly desperate sources including high-interest lenders, personal credit cards for business expenses, or loans from family members without explaining honestly that they may lose their money—desperate borrowing while insolvent just increases the debt burden without addressing causes of failure. Do not declare dividends or make distributions to shareholders when the company is insolvent or this would render it insolvent—this is unlawful and directors must repay such dividends personally. Do not resign as director thinking this absolves you of responsibility for past actions—resignation doesn't protect you from liability for conduct while in office and may actually make you look worse. Do not attempt to start a new company using the same or similar name and business model while your current company has unpaid creditors—this 'phoenixing' is illegal without following proper procedures and can result in personal liability and criminal prosecution. Do not ignore statutory demands, winding-up petitions, court orders, or demands from HMRC—these legal processes have strict deadlines and ignoring them accelerates disaster rather than preventing it. Do not refuse to cooperate with insolvency practitioners, liquidators, or the Official Receiver if formal procedures begin—cooperation is both legally required and practically beneficial, while obstruction triggers investigations and personal liability. Do not mix personal and business finances by using business accounts for personal spending or personal accounts for business expenses—this 'comingling' makes it impossible to demonstrate you maintained proper boundaries and acted appropriately. Do not make promises to employees, suppliers, or creditors that you know you probably cannot keep just to buy time—false promises destroy trust and credibility when they're inevitably broken. Do not attempt to trade through insolvency indefinitely without seeking professional advice—continuing to operate when you should have sought help is the classic wrongful trading scenario. Do not assume limited liability absolutely protects you regardless of your conduct—while limited liability is real, it doesn't shield directors from consequences of misconduct, fraud, wrongful trading, or breach of duties. Do not wait until the absolute last moment to seek professional advice when you have no options left—early advice preserves far more choices than delayed advice when crisis is unavoidable. Do not let pride, shame, or fear prevent you from taking appropriate action—these emotions are understandable but allowing them to drive decisions typically worsens outcomes. Do not blame everyone else for the business failure without acknowledging your own role—taking responsibility is both ethically right and practically beneficial to rebuilding reputation and learning from experience. Do not attempt to handle everything alone without any professional, family, or peer support—the stress and complexity of business failure is too much for any individual to manage effectively in isolation, and trying to do so impairs judgment and health. Finally, do not give up on yourself as a person because your business is failing—business failure doesn't define your worth, and many people rebuild successfully after setbacks, but only if they maintain perspective and take care of their mental and physical health through the crisis. The directors who face worst consequences are typically those who engage in multiple items from this list, whereas directors who avoid these mistakes, act transparently, seek advice early, and prioritize creditors' interests over personal extraction typically navigate business failure with far better personal outcomes.