General Interim Management & Executive Support Rescue, Restructuring & Recovery

One person doesn’t have all the answers

Being the boss of a business can be a lonely place especially when times are as troubled as they currently are.

The temptation is to present a positive front and mask the worries for the reassurance of colleagues and staff.

But the stress of this can take a huge mental toll.

Nevertheless, friends and family will notice signs that all is not well.

They include:

  • Snapping at people.
  • Losing concentration
  • Putting off decisions
  • Restlessness
  • Emotional volatility
  • Anxiety
  • Erratic behaviour

Being supportive, sympathetic and encouraging is obviously important but so is encouraging the person to get help.

Talking to someone can help to bring perspective and reduce a problem like potential insolvency to manageable proportions.

That’s where K2 comes in.

Tony Groom has a wide range of experience ranging from acting as CEO and CRO (Chief Restructuring Officer) of AIM listed companies including the turnaround of a regulated investment company; through to smaller SMEs with turnovers of below £1m

We specialise in offering practical help to businesses in trouble to help them to restructure if that proves to be the best option.

The first step is to book a free strategy and viability review with us to talk through your situation.

You can find out more here.

Banks, Lenders & Investors Interim Management & Executive Support Rescue, Restructuring & Recovery

Why not call on some fresh talent and investment?

As if businesses did not have enough to deal with as they strive to get their businesses back on track following the turmoil of the last 18 months now there are predictions that interest rates will have to rise to damp down inflation.

The Bank of England (BoE) governor, Andrew Bailey, has been reportedly arguing for the move arguing that forecasts of inflation rising to 4% if they should happen are twice the 2% target set for the BoE.

Is this the last straw?

It could be for those businesses paying back covid- loans if those loans were not given at fixed interest rates.

You don’t have to lose your business, however.

While there is no denying that restructuring a business can be challenging for its board and founders it can be a better option than throwing in the towel, provided you get the right kind of help.

Unlike other restructuring experts we at K2 have a history of building a portfolio as owners rather than remaining as just advisors. We focus on buying companies in distress to grow for our own portfolio and we have 20 years’ experience of doing this.

The emphasis is on Partnership, hence our name. We are with you for the long haul.

Obviously, there has to be at least a possibility that your business can be made viable so our first step is to do an exhaustive review of every aspect, from finances and liabilities to processes.

You can use our free cash management tool to itemise the details of your business’ financial circumstances to help you to provide us with the information we will need.

Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Turnaround Options – Can the business be saved?

Thank you to Carol Baker for including us in her article ‘Business Recovery Part 2: Turnaround Options – Can the Business be Saved?‘ for

Business Recovery part 2: Turnaround options – can the business be saved?

By Carol Baker

In our first article in this business recovery series, we looked at how you can spot the warning signs that a business may be struggling and offered practical advice on how to support clients at risk of failing. In this second article, we’ll look at how a turnaround specialist can offer an alternative to insolvency.

Many accountants make the mistake of thinking that to turn around a struggling business you must enter a formal insolvency process. This is not always the case as Mark Blayney, turnaround specialist at K2 Partners explains, “Turning around a business is more than just restructuring the balance sheet – it is about strategy and reorganising the whole business to make it into something that is viable going forward.”

“The danger happens when directors say, ‘Let’s go into a Company Voluntary Arrangement (CVA) and write-off 75% of the value of our creditors’ believing they have turned the business around. No, you haven’t turned your business around, because you have failed to address the fundamental underlying problems which got you there in the first place.”

It is important to distinguish between the ‘company’ and the ‘business’. Often a business can be saved, but not always the company’s legal entity, especially when there are conflicting interests amongst the directors which have brought the company close to insolvency.

At this point, the question becomes ‘Can the business be saved?’

A turnaround specialist is like a polymathic crisis manager who has a deep and complex knowledge that they can call upon to solve specific problems, and to do so – fast!

They have a unique ability to come into a business and take hands-on responsibility for delivering the actions required. This means in the early crisis management stages they have to quickly analyse the situation – often having to work with inaccurate and incomplete data – and use their intuition to make decisions. 

These decisions need to be made without emotion or influence from shareholders, directors or management. The highly analytical mind of turnaround specialists gives them unique behavioural skills and a management style which oozes creditability and trust. They bring calm to what is often regarded as chaos, but this stabilisation is only the first step. Real turnarounds then require rebuilding and reorganising the business for secure growth.

A two-step process for business turnaround

Whilst some turnarounds can be done with the company name and the business intact, at other times, the ‘business’ may need to be put into a new vehicle – simply because there is too much baggage associated with the company. But ultimately, turnaround is all about transforming the business including its strategic focus and operations.

First, there is the stabilisation phase – getting more cash into the business to pay staff wages and provide immediate working capital. A turnaround specialist’s first priority is to quickly get control of cash and cashflow such as finding non-essential costs to see where cash is being diverted unnecessarily, and produce a comprehensive (and tested) cash management forecast that identifies the areas which are fundamental for the business’s survival and growth.

“As independent advisers, turnaround specialists don’t have the emotional attachments that directors have, so it is easier for us to go to a lender or creditor and negotiate a repayment plan,” says Tony Groom, turnaround investor at K2 Partners.   

“Not only is this preferable to the director giving a personal guarantee – but suppliers are normally paid on a proforma basis, while a payment plan for old debt reduces the exposure, and secured lenders receive ongoing reports about the business and the turnaround initiatives as to reassure them about continuing with their support.”

A greater awareness of the funding tools available   

“We work with a range of funding solutions and have a deep knowledge of the market and where to source finance,” continues Groom.  “As such, we are well placed to advise directors how to facilitate restructuring of the debt by selecting the right financing option that will free up cash, reduce costs, and set the business back on the path of profit – often to the delight of all stakeholders.”

It is during this phase that the turnaround specialist will produce a ‘three-way forecast’ consisting of cashflow, profit & loss and balance sheet. From this, the turnaround specialist can see the predictions unfolding and how the core business can be strengthened.

Returning a business to growth

The second phase of turnaround is the growth phase, and this still requires a real hands-on approach by the turnaround specialist. “You have to get into the real nitty-gritty of the business to find those parts which really work and do more of the same; but more importantly, stop doing those parts of the business which don’t work,” says Blayney. “This trial and error approach becomes the basis of ongoing restructuring while at the same time growing the business.”

During the transformation, every aspect of the business needs to be addressed.  This involves looking deeply into the operating procedures and systems across the whole of the business, such as looking at whether the marketing strategy and promotion initiatives are right for the business; and whether it has in place the right IT infrastructure and software to handle the growth. 

As Jeremy Blain, CEO and author of ‘The Inner CEO – unleashing leaders at all levels’ says, “Many businesses are crying out for a new business model to help them successfully transform and propel them into a prosperous and exciting future. With many organisations restructuring, especially around digital, it is even more important that executive leaders’ have a more collective approach to leadership and business health.”

Successful turnarounds require collaboration

After the impact of Covid-19 turnarounds are becoming an all-too-familiar part of business life, the key is to devise a structure that will keep the reviving business nimble enough to compete. 

Implementing a turnaround relies on the clients’ existing accountants working with the turnaround specialists to look after the long-term interests of their clients, and as the adviser being the sounding board for their clients while turnaround specialists perform their magic. 

It also requires the cooperation and support of all parties – the board, management team, staff, customers, suppliers, lenders, and the turnaround specialists working together. It must be a team effort, and there must be a commitment to follow through on the actions necessary from all parties if the turnaround is to be successful. But when that doesn’t happen, and the business can’t be saved, then the only option is formal insolvency – which will be the subject of our next article.

General Interim Management & Executive Support

Starting the day right helps effective leaders to stand out

starting the day Starting the day right can take as little as two minutes and will make a difference to the rest of your day.
Thought leader @Guy Kawasaki recently highlighted one approach on Facebook, the two-minute routine, based on writing down just three simple statements with which you identify:

  1. I will let go of ….
  2. I am grateful for ….
  3. I will focus on ….

The idea is that we all wake up with thoughts swimming round in our heads that crop up to distract us, even if they are only in the background, as the day progresses and that to function at our most effective we need to settle and let go of these thoughts.
There are always massive demands on the time of busy executives and so starting the day with a clear mind and focus is important as is scheduling the day and being able to stick to tasks without distraction.
This simple technique also allows you to acknowledge concerns that are on your mind by considering them and then put them in a box so you don’t obsess over them and they don’t intrude when dealing with other matters. This is also a great tactic for dealing with anxiety albeit the subject of previous blogs.
There is no one way to set up your day, it is simply a matter of finding a routine that prepares you for being productive. Indeed writer John Rampton advocates using productivity tips and creating and sticking to an efficient daily schedule. He says, it is more than just simply making lists. It starts with understanding your “Why”, setting priorities and estimating how long the tasks will take.
The result will be that you work smarter, not harder and ultimately accomplish much more.
Rampton quotes the example of Hal Elrod, author of The Miracle Morning, who argues ““How you wake up each day and your morning routine (or lack thereof) dramatically affects your levels of success in every single area of your life. Focused, productive, successful mornings generate focused, productive, successful days.”
For Elrod starting the day right meant waking at 5am each morning to spend time in silence, meditating, reading and exercising.
For others, as in the two-minute example above, the routine for starting the day may be different, but what they all have in common is that they are quiet times alone to focus and help to declutter the mind before the demands of the day begin.
When I was in the army we had something similar referred to as the 6Ps: Prior Preparation and Planning Prevents Piss Poor Performance. Yes it was still called the 6Ps.

General Interim Management & Executive Support

Why advice to aspiring women leaders may have been all wrong

The numbers of women leaders are not rising despite the growing calls to eliminate gender discrimination in the workplace.

women leaders advised not to emulate men

There are just six female CEOs of the FTSE 100 companies and at the start of the year The Equality Trust revealed that they earn 54% of their male counterparts.

Some years ago, Sheryl Sandberg published her book Lean In, in which she argued that women should show more drive and determination, put themselves forward for daunting tasks, and showcase the same level of confidence conveyed by male leaders.

But either aspiring women leaders have been ignoring Sandberg’s advice or, if they have followed it, it has not resulted in promotion.

The “lean in” advice may even be wrong according to personality scientist Tomas Chamorro-Premuzic, an international authority on psychological profiling, talent management and leadership development who argues that it could actually be counter-productive.

It is more likely, he says, that if women mimic the accepted male behaviours of self-promotion, showing ambition and so on, it could actually lead them to mimic the dysfunctional behaviours that are shown by many toxic leaders.

Regular readers may know I have tackled the subject of the “dark triad” of corporate leadership behaviours in previous blogs, identifying the traits of narcissism, Machiavellianism and psychopathy shown by many such leaders.

In fact, the problem, says Chamorro-Premuzic, is that while gender discrimination plays a part in potential women leaders being overlooked, the primary reason why so many incompetent leaders are appointed is because there is a general difficulty in identifying and selecting competent leaders.

He identifies several reasons for this.

Firstly, he argues “there is not much overlap between people’s self-perceived and actual talents for leadership”. Often, he says, the most incompetent leaders suffer from “extreme deficit of self-awareness”. This could also be applied to many politicians.

Secondly, he says, narcissists and psychopaths often lean in. This leads to excessive risk-taking, which may be counter-productive for a business’ stability and growth. Therefore, if leaders are selected on ability to showcase aggressive behaviours we are likely to select a disproportionate number of candidates with antisocial tendencies.

However, the biggest problem with the lean in argument, he says, is that we have double standards when evaluating women and men, leading to women typically being rejected and disliked for being intimidating bulldozers or simply for not being “feminine” enough.

Instead, his advice is that in order to pick the best potential leaders, of either gender, we should be looking for such qualities such as integrity, emotional intelligence and communication skills.

Moderate ambition therefore may be a better indicator of leadership potential and aspiring women leaders’ greatest advantage because it means “having the drive and ability to lead without wanting to become the centre of the universe … perhaps because that place is usually reserved for narcissistic men.” Boris beware!

Business Development & Marketing General Interim Management & Executive Support

Is your business barely managing and if so why?

Business barely managing in stormEvidence suggests that many UK businesses are barely managing when compared to foreign-owned businesses of equivalent size operating in the UK.
At the moment it is easy to blame everything on the uncertainty surrounding the outcome of the UK’s negotiations to leave the EU, especially as political positions remain entrenched and seemingly irreconcilable with just 40 or so days to go before the deadline.
As the most recent productivity figures from the ONS (Office for National Statistics) showed, productivity and output per hour fell to their weakest in two years at the end of 2018, prompting FSB (Federation of Small Businesses) Chairman, Mike Cherry, to opine: “”Productivity data demonstrates exactly what a prolonged period of uncertainty does to an economy. Small business confidence has dropped to its lowest point since the financial crash, with four in ten firms expecting their performance to worsen.”
Of course, Brexit has prompted more businesses to divert their attention to do such things as stockpiling raw materials or components to mitigate any potential supply chain disruption, and of course, investors have been holding onto their money during this period of uncertainty.
It has also been suggested that another inhibitor to SME growth and scaling up has been what is known as the Seven-year Rule, whereby tax breaks for investors, made through tax-efficient venture capital trusts or via the enterprise investment scheme (EIS), are only accessible to companies for seven years after they make their first sale. This, it is argued, makes it harder for SMEs to access the finance they need to scale up.

Is business barely managing a “British Disease”?

However, in this context I would argue Brexit is a distraction and a convenient excuse for poor productivity and that the answer lies in the way UK businesses value, or actually don’t value, their people.  This is backed up by plenty of research from many sources.
According to the Guardian business and economics opinion writer Philip Inman there is a significant difference in productivity between the way foreign-owned businesses in the UK and UK-owned ones are run.
According to ONS figures foreign-owned businesses make up one in four of large UK-based businesses and are twice as productive as their domestically-owned equivalents. When it comes to medium-sized companies the foreign owned ones are about three times as productive.
Why should that be?
There is, argues Inman, plenty of evidence that the foreign-owned UK businesses pay attention to two things that affect productivity: processes and structure.  The ONS has found that there is a positive link between attention to these two and productivity.
Other researchers have argued that UK businesses do not value or pay enough attention to good middle-tier management, especially in family-owned firms that have been running for more than three generations.
Middle managers often have little management training or support and this leads to a lack of confidence among both senior managers and workers that their ideas are valued and suggestions acted upon.
UK businesses of all sizes clearly need to pay more attention to their people skills and competence, their processes and structure, especially once they find themselves cast adrift on post-Brexit competitive waters.

Business Development & Marketing General Interim Management & Executive Support

How do businesses develop managers to become good leaders?

good leaders helping othersAmbitious people often aspire to becoming senior managers in their organisations and some achieve their goal, but how much thought is given to whether they will be good leaders?
Training is essential for many professions but in many businesses, it is often the case that people are promoted into management jobs because they were good at something else.
While the individual may have been a top performer in their role, it is rarely asked whether that makes them capable of managing other people performing those roles.
Unfortunately, the skills required to manage people well are often a completely different to the skills needed to get on the job ladder and show promise early in a career.
Good leaders need both people skills and strategic sense. They need to be well-organised, know how to prioritise without micro-managing, know how to recruit and motivate the right people and how to handle difficult conversations and decisions.

A two-day management training course is not enough

Business profitability is dependent on management for setting goals, planning and implementation. Getting support for achieving the goals and implementing the plans involves people skills, to engage and communicate with others and motivate them in pursuit of the productivity they assume.
Such people skills are rare and not innate to even the most skilled operator in their chosen field.  They have to be learned, developed and practiced, ideally without causing too much damage although mistakes will be inevitable.
Often, managers are thrown in at the deep end with little support and even where there is some acknowledgement that training is needed two-day management training courses are not enough.
Business culture is also a major factor when developing leaders. Given that mistakes will be made, a blame culture will discourage initiative or even decision making so embracing mistakes as an opportunity for learning is imperative. It might however be right not to tolerate making the same mistake more than once.
Therefore, if a business wants good leaders it needs to create the right culture and invest time and effort into helping develop leadership skills.
There are any number of leaders who have published details of their daily schedule, which invariably includes everything from getting up before dawn, fitting in some exercise or yoga, a healthy, energising breakfast drink, to detailing precisely the time it should take for every activity in the diary for that working day as well as extra-curricular time spent on worthy activities “giving something back”.
What is often missing is how they developed their people skills and allocate time for ongoing personal leadership development, for reflection on their own performance, for learning and crucially time spent learning from others whether role models, senior managers, colleagues or subordinates,
Good leaders, in my opinion, need training and practice with ongoing support and mentoring long after taking up their first role as a leader. This will be painful as it involves acknowledging mistakes and feedback on how effectively they have managed situations.
Like most rewarding achievements, effort and pain will reap the benefits of success so long as achieving goals, self-awareness and awareness of others are incorporated into the skill set. This is not for everyone.

Finance General Insolvency Interim Management & Executive Support Rescue, Restructuring & Recovery

Could Australia’s new insolvency legislation, SafeHarbour, be a model for the UK?

According to research published in October 2010 comparing procedures in the UK, The Netherlands, Germany and Italy for restructuring insolvent companies: “The UK has a cultural, legal and professional environment that is highly supportive of reconstruction. The UK system offers a wide range of legal routes available, with courts acting flexibly.”
In May 2016, the UK Government launched a three-month consultation on revisions to the insolvency regulations, including proposals for a three-month moratorium before creditors could take enforcement action, measures to protect essential supplies so that businesses could continue trading and prevent them from being “held hostage” by suppliers and a mechanism preventing both secured and unsecured creditors from dissenting to a proposed rescue plan.
Legislation is already in place for companies to obtain sponsorship from an insolvency practitioner (IP) for a moratorium via the courts, initially for 28 days when considering a CVA (Company Voluntary Arrangement) with scope to apply for extensions.
Interestingly the Australian Government has recently introduced SafeHarbour. Enacted as part of a Treasury Laws Amendment in September 2017, SafeHarbour provides for a balance between protecting creditors and “encouraging directors to be more innovative and take greater risks”.

The basics of SafeHarbour

SafeHarbour, Australia's insolvency legislationDirectors can enter SafeHarbour after developing courses of action likely to produce a better outcome for their company.
However, they must demonstrate that they are fully aware of the company’s financial position with up to date financial records and provide evidence that they have taken steps to prevent misconduct. They must also ensure employee entitlements have been paid and have fulfilled tax reporting requirements.
Crucially, the directors must take advice from a qualified turnaround and restructuring adviser, who, in the Australian model, does not need to be an IP.

Is SafeHarbour a possible model for UK?

While SafeHarbour’s measures might appear similar to those of a UK CVA moratorium, the latter are generally not used since the advice to IPs from their lawyers has been that that sponsoring a moratorium imposes huge potential liability on them personally. Here, IPs prefer to be appointed as Administrators since this is seen as the safer option.
In the UK, rescue and turnaround advisers are already deemed to be acting as shadow directors with all the directors’ duties this entails. The protection of a SafeHarbour might provide them with a protection window to prepare and put forward proposals to creditors for consensual restructuring or a CVA. The window is needed because ransom action and winding-up petitions are increasingly used by creditors, in practice on advice from creditors’ advisers, to pursue agendas aimed at frustrating genuine turnarounds.
It is useful to study the seemingly lighter touch of the Australian SafeHarbour legislation, which could be a useful model for the UK to follow, as it would address the limitations in current practice in the UK.
Thanks for this blog are due to Australian turnaround practitioner Eddie Griffith for his excellent and helpful input into the details of SafeHarbour.

General Interim Management & Executive Support Rescue, Restructuring & Recovery

What are the qualities and role of a leader in times of business crisis?

It is a rare business that will never face a crisis and it is estimated on average this is likely to happen every four or five years.
Aside from unexpected events, such as natural disasters, a crisis be anything from a financial problem to a massive data hack, to potential reputational damage arising from inept handling of customers or stakeholders or even a product liability issue.
Effective handling of the crisis situation is crucial to the company’s reputation and in some instances to its very survival.
While those affected by the crisis will most likely look to to directors and managers for guidance, they are unlikely to be effective without leadership and clear messages from their CEO personally.

How should leaders manage a business crisis?

eadership in a business crisisWhile it is important to have appropriate systems and procedures in place for crisis management leaders can only be effective if there is a clear strategy based on a careful assessment of the situation. Often this requires scenario planning well ahead of any crisis so that early action can be taken.
The directors and managers will not be speaking with a unified voice unless they are given clear direction by their CEO.
The CEO should set the tone, and this may include acknowledging that mistakes have been made along with clear guidance on what statements can be made publicly about what the business is doing to address the situation.
So, the first step is for the CEO to ensure that the directors and managers are delivering the right message.
To do this, a crisis management team is needed, one with situation specific skills to deal with the crisis and with the communication skills to get the CEO’s messages out to all stakeholders.
Empathy without emotion will help deal with those affected when people are scared and key people need to be involved so that decisions are made and implemented while at the same time acknowledging the fear and pain among those who are affected.
The CEO should remain positive and reassuring, dampening any understandable urge to resolve the situation immediately, which is not always possible. The steps that need to be taken should be understood and wherever possible communicated to all those affected as well as to those responsible for dealing with the crisis.
An effective leader needs to be both self-aware and have a large measure of self-control.
They will need to demonstrate an understanding of others’ feelings while at the same time remaining clear-headed and focused on dealing with the crisis. This will mean fostering teamwork to minimise conflicts among crisis team members, internal staff and external stakeholders and ensure everyone stays on track during the process of handling and overcoming the crisis.
The objectives of any crisis management project are normally to minimise disruption and minimise reputational damage with the aim of restoring normal operations as quickly as possible. However all too often a focus on minimising costs and apportioning blame gets in the way and leads to a consequential fall out and a long-term damage to reputation.
Leaders take tough decisions which sometimes will need investment of time and money in resolving a crisis rather than running scared themselves.

General Interim Management & Executive Support

The main elements of director duties

directors chairBeing a company director carries with it many responsibilities, some laid down by the company’s articles of association, others requiring compliance with various laws and in particular understanding their duty of care and how to avoid breaching the Company Director Disqualification Act 1986.
Directors have a responsibility to guide a company, not only in its compliance with company law but also in the best interests of its ability to operate profitably, and to be mindful of the company’s obligations not only to shareholders but to its employees and suppliers as creditors, as well as its customers and the general public.
They must put the interests of the company before their own and be mindful of the company’s financial position at all times.  While the Company Secretary might carry out the administration and compliance with statutory and regulatory requirements the directors are responsible for all decisions and actions by everyone on behalf of the company and therefore should oversee their activity.
Directors also have specific obligations where a company becomes insolvent. Under the Insolvency Act 1986 (IA 86), they must act to minimise further potential loss to creditors.
They must therefore be careful not to continue to trade in a manner that causes further detriment to creditors, nor to prefer themselves or other parties by paying specific creditors, selling assets under value, or knowingly trading fraudulently.
Continuing to trade is a decision that should be taken by the board of directors with a note made of any dissent. The decision to continue to trade and the reasons why the directors believe this is in the best interests of creditors (not the company) should be recorded in the minutes.

Director duties are covered by a wide variety of laws and regulations

Individually and collectively directors have a duty of care to both employees and members of the public such as compliance with Health and Safety regulations and should be aware of their liabilities under the Corporate Manslaughter and Corporate Homicide Act 2007. This includes actions by their employees.
They must also ensure that the company complies with the Companies Act 2006 and other legislation relating to Employment, Competition, Bribery, the Supply and Sale of Goods, Data Protection and a ton of industry-specific legislation.
In a wider sense, a company’s board of directors should determine and oversee the company’s strategic objectives and policies and monitor progress towards achieving them.
They have responsibility for appointing senior management and ensuring accounts are up to date and that they are aware of the financial position. They must also account for the company’s activities to relevant parties, including shareholders, and can be held to account by the press, Parliament and public bodies.
You can download a free, comprehensive guide to directors’ duties from our knowledge bank

Business Development & Marketing General Interim Management & Executive Support

Narcissists and their negative behaviours at work

There is a trio of negative behaviours that psychologists call the “Dark Triad”.
They are characterised as psychopathy (being callous and insensitive), Machiavellianism (manipulating others) and narcissism (tendency to seek admiration and special treatment).
Research by Belinda Board and Katarina Fritzon, of Surrey University, has found some evidence that such characteristics of behaviour, often described as psychotic behaviours, are more common in managers and leaders than they are among criminals.
While some would argue that at least a modicum of these behavioural characteristics may be necessary for professional success, there is a level at which they are downright dangerous for a business.
Starting with narcissism, we will be looking at each of the Dark Triad behaviours in our next three blogs.

How to identify narcissistic behaviour

narcissistic businessmanThe fictional David Brent, portrayed by Ricky Gervais in the TV series The Office, is perhaps the best-known example of a narcissistic manager.  In the real world, arguably US President Donald Trump is a classic example.
Narcissists can be described as seeking reputation and status, wanting to be admired, tending to expect special favours and wanting people to pay attention to them. Their behaviour is often referred to by others as being selfish, egotistical or single minded.
However, whether such behaviour is beneficial or toxic is all a matter of degree.  Clearly, at the moderate end of the scale narcissism can be helpful for someone who is ambitious in climbing their professional ladder or successfully starting up and growing a business. It also is characterised by a degree of self-belief and self-confidence which are important drivers of success.

How much narcissism is too much?

According to an article in extreme narcissists may be “know-it-alls” eager to give their opinion on everything and anything but therefore unable to listen, to be self-aware or collaborate.
They can be people with superiority complexes and manipulative in flattering colleagues in order to enhance their own reputation and career.
Or they can be outright bullies or vindictively determined to undermine anyone they see as challenging their status or position.
This more toxic end of the narcissistic spectrum can make life even harder for employees and colleagues dealing with such behaviour in the workplace when they need to focus on challenging jobs, targets and deadlines.
While the general advice for dealing with narcissists tends to be to ignore their behaviour and not to challenge them but this is easier said than done, especially if they are a boss or manager.
In the worst case, a colleague or employee who becomes the focus of relentless manipulation, bullying or efforts to undermine their reputation will be using up considerable mental energy in following this advice, making it more difficult to concentrate on the work they should be doing.
If the problem is more widespread and affecting several people on a board of directors or in a department, it may undermine the ability to co-operate effectively as well as being a distraction affecting their productivity.
It has been said that the acquisition of ABN Amro was down to Fred Goodwin’s ego, but a lack of awareness of how one person’s behaviour can influence a board was the real problem and the reason that led to the wrong collective decision being taken.
Ultimately, the potentially disruptive effects of an extreme narcissistic personality for the business as a whole could have the potential to destroy its ability to survive and grow.

Debt Collection & Credit Management Finance Insolvency Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Proposals for new legislation to restructure and save businesses

stressed businessman 2 Huffington PostAll too often when a business gets into financial difficulties the odds are heavily stacked against it being able to restructure and survive and, equally, many directors leave it far too late to call for help.

The important question is why?

We would argue that it is the very nature of current legislation that uses insolvency procedures to tackle problems where the word “insolvency” is such a toxic term. The process deters directors from seeking help and they view meeting an insolvency practitioner as being like a visit to an undertaker, rather than seeing a doctor. They tend to only seek help once they have lost all confidence in the business and assume it can no longer be saved.
In the changed financial landscape since the crash of 2008, creditors have increasingly sought to get to the head of the queue for being paid and there has been a rise in the use of hold-out or ransom strategies. Examples are landlords refusing access to serviced offices or wifi when there are rent arrears, bailiffs seizing key assets over rates arrears and creditors applying for Winding-up Petitions in the courts as a means of debt collection.
It is therefore encouraging that the Government is consulting on proposals to improve the process of helping companies in financial difficulties and shifting the emphasis decisively towards rescue and recovery.

So what is being suggested?

The Government is proposing to introduce a three-month moratorium to prevent enforcement or legal actions by creditors and allow a breathing space for rescue plans to be prepared and considered. This would allow businesses to continue trading during any restructuring and include measures that ensure continued supply of essential goods or services without being held “hostage” by suppliers.
It is also proposing measures to bind creditors to a rescue plan and introduce a “cram-down” mechanism to prevent a minority of dissenting creditors from blocking the plan. This would level the playing field between unsecured and secured creditors, where currently secured creditors can wield disproportionate power in their own interests.
We would argue that any new legislation should be seen as being entirely separate from the current insolvency options.  It would allow directors of a struggling business to make a simple application to the courts early and easily, thereby allowing time to develop a realistic restructuring plan that would be in the business’ interests while also protecting creditors.
To avoid abuse, the new process would be overseen by independent professionals where the proposals are considering who these professionals might be. We believe that such professionals should have turnaround experience and be qualified accountants, lawyers and turnaround professionals. We would also argue that those insolvency practitioners who do this work should be excluded from taking a formal insolvency appointment so as to avoid any conflicts of interest.
These proposals, if introduced following consultation, would, in our view re-balance the process of helping struggling companies and encouraging directors to seek help much earlier and that such help should be free from the fear of it being tainted by the word “insolvency”.
Hopefully this welcome initiative will result in more businesses surviving, being able to trade their way back to stability and eventually growth, thus improving the returns to creditors and saving jobs.
(picture courtesy of Huffington Post)

Business Development & Marketing General Interim Management & Executive Support Turnaround

Better know your weaknesses than be unaware of them!

eliminating weaknessesAs a business owner or manager it would be nice to think you have no weaknesses but how realistic is that?
It can be instructive to learn what others think about you and perhaps the first step in getting a realistic picture is to resolve to be honest with yourself.
It can be helpful to list the key characteristics you need for your role. As a business leader you need to show leadership, for example, to be able to stand back and concentrate on strategy and business growth and to not get bogged down in unnecessary detail.
However, as a leader you might prioritise accomplishing defined goals or you might prefer to set values and a vision. The fact is that no one style is right or wrong but you need to know what gaps need to be filled by yourself or others. You may need to work on your weaknesses.
As a manager you will need to be involved in getting the job done. You will need to be good at planning and scheduling, at organising and motivating staff and at all manner of tasks that you cannot delegate to others.
But personal strengths and weaknesses are not related only to how you approach business and management; they also include how you deal with others like investors, customers or suppliers, essentially how you communicate effectively ie in a way that gets results.
To find out about your strengths and weaknesses it can be helpful to consult one or two trusted colleagues or perhaps an objective business adviser and to map them using the SWOT analysis method.

Identify your most important weaknesses to work on

It helps to have a personal development plan with a timeline and goals to monitor progress.
Identify whether you need training, counselling or self discipline. Feedback is also important and again an objective mentor or business adviser will be useful, not only as someone to whom you are accountable but also who will provide you with positive feedback.
At the same time it can be useful to look at your strengths.  Are they essential to your role or an indication of you inability to let go, to trust or to delegate?
With issues like short temper or procrastination it may be helpful to enlist the help of a specialist counsellor to help work on behavioural skills.
Equally important to in-work skills is the ability to switch off, rest and recharge. This is something people in key positions often find difficult but it may be time to consider taking up a leisure pursuit that is sufficiently absorbing and interesting to encourage this.
To avoid being left behind, you need to be aware of your weaknesses and constantly work on them.

Business Development & Marketing Finance General Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Do you manage your staff or do they manage you?

word cloud people skillsRecently I have come across a situation that I call Upward Management.
This is where staff are managing their managers rather than management setting goals and managing their staff.
An extreme example was a situation where an administrator was supposed to complete their daily workload before leaving the office but instead they often went home leaving critical work unfinished. This meant that her boss was having to complete client reports due that day under service level agreements.
Despite frustration and resentment, the boss was not confronting the staff member or the situation in order to resolve it. Instead the boss simply made oblique comments to the person concerned which triggered an emotional and somewhat aggressive response.
There can be a number of reasons for this, including a failure to set measurable goals, or having set them failing to monitor performance.
This situation can also arise where a manager is either afraid of confrontation or has not been properly trained to manage people. Perhaps they have risen to manager level but are not entirely comfortable with it. Perhaps they fear that staff might walk out or hold the threat of doing so over their manager’s head.
In this particular example my personal view was that the subordinate controlled their boss through passive aggressive behaviour.

The qualities of an effective manager

To manage people effectively a manager should be able to empower people, motivate them and be confident about delegating work.
Effective empowerment is about setting boundaries so that people understand and take responsibility for their work. It also means encouraging them to stretch their abilities and to be innovative. This will work provided there are proper support structures in place.
When staff are motivated they are likely to perform better, and this does not depend solely on salary or bonuses.  An effective manager should be able to motivate people with interesting work, creating a sense of their being part of a team and most importantly by recognising and appreciating hard work.
Delegation works well if a manager understands people’s strength and weaknesses and is able to match the person to the task in a way that stimulates them and shows that they are considered competent to carry out the work successfully.
Ignoring poor performance is not helpful either to the staff or ultimately to the business.  Dealing with the situation does not have to mean an uncomfortable confrontation. A supportive conversation that identifies, what is the problem and what support a person needs to improve may be a more constructive approach.
When the situation like the example cited involves a level of bullying, it is crucial that the inappropriate behaviours are highlighted and addressed.
Finally, it is worth remembering that the longer a problem goes on the harder it will be to remedy.
(Image courtesy of David Castillo Dominici at

Business Development & Marketing General Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Business websites and Google analytics – time for a trusted expert?

Google analytics overviewBusiness owners need accurate and detailed information about their website’s performance and one of the most comprehensive tools for finding out is Google Analytics.
Businesses are now operating in a world where potential customers not only expect even the smallest of them to have a website but also have high expectations about what it delivers.
In its most recent annual survey US-based marketing analyst BrightLocal found that 40% of those aged 18-34 and 40% of those aged 35-54 would be more likely to contact a local business if it had a website and overall that 87% of customers would not consider using a business whose website had low ratings.
They increasingly expect a website to be attractive as well as informative and to be responsive, which means that it should work as well on a mobile phone or tablet as it does on a computer screen. The majority of those surveyed expected to see customer reviews and used them to assess the quality of a local business.
This demonstrates how important a business website is both for professional credibility and to attract and communicate with potential clients and customers.
It means that even the owners of the smallest local businesses need to be willing to invest as much as they can manage in a professionally built website and should beware of D.I.Y. options.
They will also need to know how well the website is performing and this means they will need at least some understanding of what the statistics in Google Analytics are telling them.
The information available on Google Analytics is in fact extremely detailed and comprehensive, but for an overview a good indicator is to look at the “audience” section of the menu.  This breaks down information on who’s been visiting a site into a wealth of details, including age, interests, location, language, how long they stay on the site, the pages they visit.  The list is endless and the amount of data is daunting.

Time to call in the experts

No business owner can expect to be able lead a business, maintain an oversight of all that entails and then also to have the time or the expertise to frequently check on all the analytical information available about the business website.
Knowing what information is important to a specific business, being able to draw conclusions from the data and then using it to plan, develop and carry out a marketing strategy is becoming more and more specialised.
However, the business owner/manager needs to have enough information to be able to first select the right marketing support and to then be able to ask the right questions of those responsible and to work with them to set the right marketing goals.
It is up to the marketing team to devise the activity needed and to carry them out but the business owner needs to have the confidence that they can do the job well.

Finance General Interim Management & Executive Support Turnaround

How to relish challenges and deal with anxiety

Many people deal with pressure in business but, according to a new study by the Harvard Business School, few are good at managing the accompanying anxiety.
The key, it says, is to transform anxiety into energy and excitement rather than attempting to stay calm and going about the attempt in the wrong way.
According to the study, it is mistaken to think that trying to calm down is the best way to cope with anxiety, because it encourages the focus to be on things that could go badly in the form of projecting a catastrophic outcome. This can become debilitating due to an inability to make decisions.
Actually what people should be attempting to do is to channel anxiety in a way that is productive.
It is all about using logic to put things into perspective by asking what is the worst thing that could happen and how much will it matter in, say, five years time.
A useful trick is to think about situations that are far worse than the one causing the anxiety and recognising that other people are far less concerned about your problems than you think.
Using a range of self-management techniques will reduce the anxiety and enable it to be converted into constructive, enthusiastic action.
Anxiety may be a good spur to productivity, but only if it is used to manage the emotions in a way that leads to decisions and action and not indecision and paralysis.

Business Development & Marketing General Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Where can a business leader turn for support?

It is, as we have said before, important that the owner/MD/CEO of a business is focused on strategy and leadership, but this can be a very lonely place.
There is also the danger of becoming isolated or out of touch if the position prevents people from offering ideas and input into strategy development.
So how can a business leader stay in touch and where can they find support?
The traditional way is to look outside a business for support; however there is another source that might be considered.
There is an inspirational example in Paul Walsh, the former CEO of the drinks company Diageo. He used to pretend that he was not the boss and ask other executives what decisions should be taken.
The purpose was to encourage them not only to have the confidence to speak up when necessary but also to question him when they had more knowledge than he did.
This is a great example of a business leader involving subordinates in strategy development. It achieves a number of key objectives for any company; it builds a sustainable long term business by accepting input from everyone; it develops managers and prepares them for leadership; it establishes a culture of valuing people and their role in shaping the future; and it ensures that a CEO/owner does not become isolated.
Please share other examples of best practice by leaders who have inspired you.

Banks, Lenders & Investors General Insolvency Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Turning around the economic juggernaut means restoring SMEs’ confidence

Business Secretary Vince Cable warned at the LibDem conference that rebuilding the economy was going to be a long process requiring investment in business, in research and in training people in the skills that will be needed in the future.
We are also told, repeatedly, that SMEs are the primary engine for the country’s growth.
The trouble is that SMEs’ confidence has been knocked for six over the last five years, not least because despite innumerable Government initiatives they have time and again been refused lending by the banks. The most recent figures on the Funding for Lending scheme published earlier this month showed that lending to businesses and consumers had fallen by £2.3 billion since June 2012.
Now the Federation of Small Businesses (FSB ) has produced research showing just how beleaguered SMEs are feeling with more than 56% of those polled believing that the banks just do not care about them and more than a third reporting sharply increased bank fees over the last year. Very few of those polled knew that it is possible to appeal against a bank’s refusal of a loan application.
Worse still only 37% of those polled were aware of alternative sources of lending, such as crowd funding. 
K2 has a comprehensive, free, downloadable guide to sources of business finance available at . The FSB has also launched a guide, How to Get a Bank Loan, which also covers appealing against refusal, switching banks and other finance options.

Business Development & Marketing Cash Flow & Forecasting General Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Build a Flexible Marketing Model to Ensure Perpetual Growth

Following on from the flexible business model that we developed to ensure the perpetual survival of businesses it makes sense to explore how growth can be achieved with flexible marketing without ‘betting the farm’.
The principles of flexible marketing are similar to those of survival as they involve tight cash management and being aware of the fixed nature of many contracts for promotion initiatives that either don’t work or become a financial burden.
Marketing can be complicated and there are lots of alternative ways to achieve marketing objectives where it is often difficult to measure success in terms of ‘return on marketing spend’ or ‘bang for buck’ when developing a marketing plan.
Marketing activities can serve a number of purposes which makes measurement even more difficult. The model that works best will be different for every business, but when markets are so uncertain and cash is tight marketing can make the difference between failure, survival or growth. The key is to understand then manage the relationship between cost and return for different marketing activities. Flexibility reduces the cost of switching between activities which in turn reduces the cost of getting it wrong.
Possible marketing objectives include generating new sales leads, selling different products or services to existing customers, launching a new product, persuading potential customers to buy from you, or reassuring clients by building a reputation, particularly for those firms selling advice or professional services when they want to set up or move into a new geographical market.
Having established your purpose and defined objectives you need to consider various marketing initiatives, affordability and how they might be measured in terms of cost and outcome. Essentially flexible marketing is based on a process of trial and error where you can afford to get it wrong.
Simply placing a single advertisement can work for some firms even if it is expensive, providing the results justify the cost.
Affordability versus flexibility can be an issue especially when payment is spread over a period of time. While flexibility is likely to cost more, most initiatives can be easily trialled and measured without the need for a long-term commitment to test whether they work, e.g. pay per click such as Google Adwords, internet banners, leaflets, posters, adverts on print, radio or television, redemption vouchers, point of sale promotions, text based promotions, stands at trade fairs and even short-term rent or pop-up shops.
Less easy to measure are longer term marketing initiatives such as publishing articles in online media to generate visits to a company’s website. Similarly public relations and press releases to relevant media can generate press interest that raises awareness but may not produce immediate sales. These are more speculative, need not be expensive and can help establish a reputation for the business as an expert in its field. They offer longer term benefits since they tend to be picked up by search engines and therefore have a long life. Using such methods will depend on whether the business firstly can afford to invest the money and secondly is looking to a longer term return than immediate sales or orders.
Whatever initiatives are deployed, the marketing mix needs to be continuously reviewed and refined in exactly the same way as applies to using a flexible, cost sensitive business model.
Add a flexible marketing model to a flexible business model and you can both ensure perpetual survival in a difficult economic climate and perpetual growth.

Business Development & Marketing Cash Flow & Forecasting General Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Build a Flexible Business Model to Ensure Perpetual Survival

While businesses might be concerned about a eurozone Armageddon, whatever the outcome they will need to ensure survival for the period of austerity that is likely to characterise the next decade.
Although growth is desirable, and has been the purpose for many businesses, a more realistic objective in times of uncertainty is to stay in business for the next five years.
Arguably the best way to achieve perpetual business survival is to avoid running out of cash. This involves examining all cash commitments and where possible turning fixed costs into variable ones so as to reduce the breakeven level of sales necessary to cover overheads and fixed obligations.
Long-term fixed obligations include fixed-term rents, hire-purchase or lease agreements, repaying loans, servicing interest, supply contracts and staff employment. Common examples of where companies have taken on such commitments tend to relate to: offices, plant and machinery, IT equipment and software, vehicles, signage, furniture, printers and photocopiers, mobile phones and telephone systems.
Most companies also fail to cancel or at least review contracts that automatically renew, such as: IT equipment and plant leases, life insurance, medical policies, employee benefits, subscriptions and membership, servicing and maintenance, office and window cleaning, sanitary towel and waste removal, portable appliance testing (PAT), health, safety and fire extinguisher inspections and so much more.
The key message is to review every payment and check whether it is necessary and you are not being overcharged.
While it sounds counter-intuitive, businesses often make more money by reducing sales. It is worth looking at the quality of contracts and the quality of customers. The benefits from focusing on only those contracts and customers that provide an adequate profit, that pay well and pay on time can be considerable.  Gross profit margins are increased, overheads are reduced by not having to chase payment and less cash is needed to fund pre-sale payments and post-sale credit. The flexible business model means that you no longer need to take on unprofitable work.
All too many companies are too focussed on chasing sales (and tails) to review costs and find ways to reduce them so reviews should also look at other ways to cut spending. Huge savings can be made on travel and communications costs by using internet-based phone and video conferencing facilities like Skype or VOIP services, for example.
The flexible business model is based on a principle of not having to pay out cash if there is no cash coming in. It needs leadership and teamwork but a focus on improving profitability, on reducing costs and on converting fixed overheads into variable ones means that a business can achieve perpetual survival.

Banks, Lenders & Investors Cash Flow & Forecasting General HM Revenue & Customs, VAT & PAYE Insolvency Interim Management & Executive Support Liquidation, Pre-Packs & Phoenix Rescue, Restructuring & Recovery Voluntary Arrangements - CVAs

Many companies for sale turn out to be insolvent

Many companies are being listed for sale through brokers with high price tags based on very tenuous valuations, where the owners have been deceived into thinking they will be paid a huge amount for their equity.
However, on closer inspection it turns out that many of them have a Time to Pay arrangement with HM Revenue and Customs or are in arrears with the Revenue and are stretching their trade creditors. All too often they are insolvent but don’t realise it. 
This over indebtedness is becoming a serious concern among potential investors because often the company they want to buy is operationally a great business and for trade buyers a perfect fit with their existing businesses. The problem for investors is how to protect their own interests and avoid contamination.
Very often, even experienced executives lack the knowledge and methodologies for assessing a company they want to buy, let alone knowing how to sort out the indebtedness once due diligence has revealed its extent.
In my view, potential investors can work with incumbent directors to reach agreement with creditors that protects all parties by enhancing the prospect of a return to sellers and avoiding cross contamination.
One method I use is an investment, conditional on approval of a CVA by creditors thus leaving finance agreements and any liabilities in the target company. It also allows creditors’ issues to be addressed where they are not normally consulted in a pre-pack. For the investor, this can be structured to give them security and control if they so wish.
As a rescue specialist I would advise owners trying to sell a business in difficulty to employ their own turnaround advisers before putting the business on the market.

Accounting & Bookkeeping Cash Flow & Forecasting County Court, Legal & Litigation Debt Collection & Credit Management Factoring, Invoice Discounting & Asset Finance General Interim Management & Executive Support Rescue, Restructuring & Recovery

Companies are failing to manage Debt Collection and Credit terms

Many companies are risking their own solvency and ability to carry on trading because they neither manage their debt collection proactively nor have clear procedures for setting and imposing credit terms with their customers. Consequently they are suffering from late payments, or worse having to write off invoices due to bad debts.
They compound the problem by extending credit to customers who turn out to be a bad risk.  If a customer is itself borrowing money under a factoring or invoice discount facility then the company is depending on their customer’s customers thus creating a pack of cards that if recoursed as a bad debt after 90 days could bring down everyone in a supply chain.
I believe the root of the problem to be the company’s own credit management where I find that very few companies have a robust system in place.
The key steps are to do a credit check on any new customer, to set limits, manage them and regularly review customers’ credit levels.
Getting paid however requires more than just a credit check, it involves starting management of invoice payment long before it is due. Checking the invoice is approved for payment for example, will avoid discovering that the order was not fulfilled exactly as required, or the invoice has not been received! 
Paperwork is crucial. There should be a procedure in place whereby the delivered/ completed order is signed for/ off with a clause on the document that includes written confirmation that the customer’s requirement has been satisfactorily fulfilled.
In addition companies also need late payment procedures. If an invoice remains unpaid after the due date, a robust system for managing late and non paying customers should include putting a stop on processing any further orders and debt collection that may result in litigation, and enforcement if necessary.

Banks, Lenders & Investors General Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Employee Equity can Improve the Chances of a Successful Restructuring

Businesses and the UK economy are under pressure from inflation thanks to increased taxes, such as VAT, and commodity prices and also pressure due to declining sales thanks to the reduction in consumer spending.
The current situation is as there has been a considerable amount of wage restraint in the marketplace with employees more concerned about keeping their job than earning more. This fear of job loss however does not apply to all staff, where retaining certain key employees is crucial as their loss would have an adverse impact on the business.
This is a common problem for restructuring advisers who need to solve it when dealing with companies in financial difficulties. When a business is in financial difficulty management often seeks to reduce staff costs such as by asking employees to take a pay cut in order to help the company survive and to keep their jobs.
Many attempts at restructuring insolvent companies fail due to flawed restructuring strategies and an inability to get the support of staff for a realistic solution. In the case of the Rover car company the opportunity was there to restructure the company using the £500 million dowry from BMW. But management failure and a lack of ownership of the problem by staff and their union representatives contributed to the company failing five years later when all employees lost their jobs.
Employees tend to be more concerned about the survival and future viability of their jobs than most other stakeholders. Banks and lenders tend only to be interested in the security of their outstanding loan, and shareholders often sell their shares or just ‘hang on and hope’ without further investment.
Involving employees in the development of a restructuring plan instead of imposing decisions on them can bring about solutions such as real cost savings and flexibility.
This notion of giving employees a greater say in their future exists in other countries, notably in Germany where employees’ representatives sit on the board of directors, and in the USA where unions like the Teamsters often hold shares in their member companies and are actively involved in strategic decision making.

General Insolvency Interim Management & Executive Support Personal Guarantees Rescue, Restructuring & Recovery Turnaround

An Outline of Shareholder and Director Liabilities When a Business is in Difficulty

When a company is insolvent the duties of the directors as its officers move from a primary duty to shareholders to a primary duty to protecting the interests of its creditors.
Shareholders’ liabilities are limited to the value of their equity and are protected from liability to creditors under what is known as the “corporate veil”.
However, if the shares are only partly paid for and the company enters formal insolvency the creditors can, via the appointment of a liquidator, demand that the shares be fully paid in order to discharge the creditors’ liability.
It is also possible that a company’s shareholders might have given a personal guarantee at some stage during their involvement with the company.  It might be that at start-up for instance, particularly when a family member has started a small business, or when the company subsequently entered a contract such as a lease, some or all of the shareholders personally guaranteed the contract and then later forget about it, especially if they are no longer directors or officers of the company as they may have been in its early days.  It can also be an issue after the shareholders have sold their shares but not discharged their personal guarantees.
Directors, on the other hand, can be held to be personally liable under the Insolvency Act 1986 for money owed to creditors. They must not sell any assets under their market value. They must not pay some creditors and not others in a way that seeks to prefer those being paid.  The fiduciary duty imposed on the directors of an insolvent company leaves them with personal liabilities that are not imposed on shareholders.
However, it is often the case with small companies that the director and shareholder are one and the same and in those situations the director must remember that he or she wears different hats as director, shareholder, employee and also as a creditor, if they have lent money to the company. This is in particular an area where repaying director loans can attract a charge of preference referred to above.
It therefore makes sense to get outside help from a business turnaround or rescue adviser if you are involved in a business as both a shareholder and as a creditor. It is in the advisor’s interests to offer realistic solutions to help restructure the company.

General Insolvency Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Directors Could be Storing Up Trouble for Later by Sacrificing Pay and Drawings Now

In the current economic crisis company directors are cutting their drawings and foregoing their salaries in order to save their companies still hoping that the market will recover.
As a result they are retaining costs that their companies cannot afford by sacrificing their personal drawings on the company today.
For how long can, or should, directors sacrifice their income and dividends in order to retain the company’s capacity for growth in the hope the order book fills up?
Once a company’s creditors are affected by a worsening balance sheet then there is a risk that the directors could be held personally liable for the increasing debt if they do not take decisive action to get the situation under control, for example by consulting a business turnaround adviser.
In any event no company can continue in a situation of insolvency for long in the hope of an upturn in the market without taking some measures to try to move it back to profitability.
At the time of writing it is estimated that there are more than 370,000 Time to Pay arrangements between businesses and HM Revenue and Customs (HMRC). Such a huge number suggests that a lot of directors have sacrificed their drawings in order to prop up their company to keep it going in the short-term by deferring payments rather than restructuring the business for long term survival. This highlights the need for a lot of companies to change their business model and significantly cut their costs.
Doing so would benefit a company’s directors, who could then start to pay themselves once the company resumed profitability.
While it may be easy in such circumstances to cut your drawings, pension contributions or health insurance this can only ever be a short term measure. 
Without a proper review of the company or the ability to make profits you may be prejudicing your personal futures.
It is a very rare company that does not need to review its business model from time to time, and it may also be that there is a viable core business buried under the current problems that an objective but supportive turnaround adviser may be able to identify and help the directors to nurture.