Planning for the Worst Case Scenarios in Business
While we all want to enjoy the fruits of our labour it is easy to be fooled that all is well within your business. In order to prepare for the worse case scenarios in business you have to stay informed with all aspects of your company even if they are negative. Worst case scenarios, like receiving a garnishee notice, can be handled given the right preparation.
Receiving notices from the tax office and other creditors may be the worst case scenario you cannot avoid. This may be due to industry wide downturns that cannot be solved with the best of management teams, marketing or other business practices. It is important to stay up to date with your industry to see how others are faring because if you are experiencing cashflow problems your competitors may be experiencing it too.
In an unavoidable worst case scenario there are options to try and help you stabilise a business and these include:
Voluntary Administration – you may appoint a firm to take over the company and try to save it.
Bankruptcy – Like voluntary administration this is another option, especially for individuals, to protect themselves from creditors if they do not have the means to cover liabilities.
Liquidation – this may become part of your voluntary administration process. It means you will sell off all assets in order to cover liabilities.
These three options are definitely a worst case scenario but can help you avoid personal liabilities for your companies debts and actions.
One of the worst things that can happen to a sound business is mismanagement and it is up to the Board of Directors to make sure this does not happen. If your business is experiencing problems and it doesn’t seem to be the business model then it may be upper management that are not pulling their weight. One option is to hire outside investigators to look at the goings on of the company in order to see where the problem lies.
Outside help will almost always be needed in a business worst case scenario as there are many companies that specialise in rescuing struggling businesses. If you receive something like a Director Penalty Notice and have not sought any help then you really need to as soon as possible. Avoiding disaster may mean you have to hand over the reigns of the company to someone who specialises in worst case scenarios.
The demise of a company is a terrible time no matter how big or small it is. Not only does it effect everyone who works for the business but also everyone who does business with the company. If a company is liquidated it means that there will be many people adding their name to the list of creditors:
There are always flow on effects of a company collapse and if this unthinkable situation happens you need to be prepared.