A BUSINESS recovery specialist has urged companies to give themselves a health check this January.
The advice follows research suggesting Bournemouth businesses have been slower to recover than those in other parts of the UK.
Insolvency practitioner Begbies Traynor’s Red Flag Alert research showed the number of Bournemouth companies experiencing ‘critical’ distress levels remained broadly flat year-on-year.
There was also a quarterly 19 per cent lap in ‘significant’ distress levels last autumn, with the number of businesses in this category increasing from 616 to 732.
Julie Palmer, south west regional managing partner with Begbies Traynor, said: “The figures for the town weren’t as positive as we’d hoped but it’s not a cause for despair.
“There are things that small businesses, which are vital to the local economy, can do to avoid getting into trouble at a time when opportunities for growth are increasing.
Julie offers a six-point checklist for companies: 1. Problems are often foreseeable. Most distressed businesses have been locked into an adverse trend for some time but managers are too close to see it. External help is often free for an initial meeting.
2. Control those finances. It is important to record transactions completely and accurately, to show directors how the business is performing now in comparison with the past.
3. Get an eye for detail. Directors should perform frequent and realistic reviews of cash flow, liquidity, debtor status, inventory levels and overheads.
4. Prepare to admit that all is not well.
5. Seek help early. The input of an insolvency and business recovery professional should not be seen as a last resort but as part of any business plan to avoid pitfalls.
6. Insolvency may not be the end. If a company cannot be saved, the emphasis is on saving the underlying business in a way that will maximise its value for creditors.
Julie said the checklist would help protect against any interest rate rises, which are increasingly expected within 18 months.
Being resilient in the face of rate rises is especially important to “zombie” businesses, which are only generating enough cash to service debts.