Not everyone is cut out to run their own business, most people will go on to work for a well-established company, hit their targets month to month and count down the days till payday!

For some this lifestyle is a little cramped and the idea of working on your own clock has a far deeper appeal than watching others get rich on your efforts put forward in a company. Let’s get one thing straight, every scenario comes perfectly wrapped with its advantages and disadvantages.

Running your own business means not being able to run when trouble’s knocking at your door. Facing the hardships that come along for the ride is part and parcel of being self-employed. But you don’t have to do it alone, and that’s where business rescue comes to the rescue.

Insolvencies and liquidations in South Africa are on the decrease. But that doesn’t mean we can afford to rest on our laurels! It’s still a tough economy out there and anything can go wrong at any moment, so it’s up to the owner to take preventative measures in the event these unforeseen times occur.

In the former part of 2016 we saw a decrease of 3.5% when up against the same period of 2015, and while this all sounds wonderful and we’re already standing in line with our wallets, clipboards and ideas for opening up a business, we continue to see a staggering number of business liquidations each month.

 

It’s not all dark clouds and stormy weather, we need to bear in mind that liquidation (if voluntary) should always be a last resort. Many smaller sized or medium-sized enterprises (SME’s) have been known to feel it the worst and at every opportunity should rather consider very alternative to liquidation.

Now that you have an introduction to businesses and their struggles, let’s get down to why we’re here in the first place – to pore over the 3 ways in which to rescue your business if indeed trouble comes knocking.

1. Allow for internal liquidity

Ensuring you maintain a strong cash flow simply means bailing yourself out of trouble when you’re in it! If you find however that this isn’t the easiest process to manage financially and you’ll need to outsource for additional funds to keep the cash flow afloat, then there are options. Investors will gladly come to the rescue if you can illustrate on paper that this trouble is not permanent, it’s circumstantial, and with a bit of help (financially of course) it can be resolved! This will afford you the time needed to sort out your issues all the while operating as normal, ergo keeping the business going.

2. Re-evaluate Management positions

This is a difficult one to execute. Businesses can only go as far and do as well as their management team will lead it. When the figures and results aren’t proving to meet the financial requirements of the business, it’s the first department you need to examine, and it’s, unfortunately, the first place you need to restructure. Weak links in a management team can sink a business before you even realise there’s a problem. Often times it can just be an attitude adjustment that is required and the current team can turn it all around. However, if you’re aware this isn’t the case, replacing dead weights in an organization will increase efficiencies and you could have your company on the up again in no time.

3. Officially apply for Business Rescue

South Africans now have access to a corporate rescue system that affords the company that’s (let’s face it) about to go under, the opportunity to access an interim liquidity that keeps the business going all the while a proverbial rescue boat is inflated to save it before it drowns!

In the event that your company is the potentially drowning man overboard, you will be able to relieve the stress by applying for a notice to begin the proceedings. These rescue proceedings are filed with the Companies and Intellectual Property Commission (CIPC). Once you have rescued practitioner in your corner, he’ll go through all the options you have and strategize a new plan that ultimately allows you to continue trading while restructuring.

Nervous of being rescued? Don’t be!

We understand that there are certain companies that when in financial distress are unsure of whether to take the leap into the floating tugboat or not due to the unknowns that come along with it. But at the end of the day, we have all the answers to your questions, and it’s just a matter of doing a bit of homework on your side and calling us to give you the peace of mind you’re after before making the decision.

Are there warning signs that my business may be headed for trouble?

Cash flow will always be a good indicator of troublesome times on the horizon. Keep an eye out for lower cash flow and get on top of it right away if you’re forecasting quiet times and negative cash flow, you will need to consider business rescue.

What period do the business rescue proceedings cover?

Generally, a three-month term as per the Companies Act 2008, however, this can be extended under specially requested circumstances.

What does the rescue plan entail?

A meeting is called and a business rescue practitioner is appointed to your business. That’s the first step which is followed by a business plan being drawn up from having examined the books which will lead to the rescue of the business!