Few businesses need reminding that we are now eight years on from the onset of the financial crisis of 2007/08. Our local business community has changed immeasurably with some of our most high profile businesses unfortunately shutting their doors for good.
Thankfully, confidence is gradually returning to the local business community, albeit at slower rate than we would wish for. With announcements of job creation now more common place, increased conventional and alternative funding available, and transactional activity on the up, on paper it would seem that this is the time that all businesses within Northern Ireland should have growth at the forefront of their strategies.
However, the insolvency statistics for Q2 in Northern Ireland show that for all businesses this is not the case. Corporate insolvencies are up 41.8% on the same quarter in 2015, with personal insolvencies up 8.5% over the same period.
For most of the businesses that entered an insolvency process during this period this is a long term legacy of the financial crisis. Since the onset of the financial crisis growth has not been an achievable aspiration; merely keeping their doors open has been their fundamental objective. Businesses in this position, being on the verge of insolvency, are usually shackled by cash flow pressures and typically operate on a month to month or even week to week basis.
Every business is different, therefore there is no such thing as a one approach fits all model for turning a business around. An effective turnaround strategy needs to be bespoke and multifaceted often involving a complex consideration of short and long term strategic review, appraisal of financing mix and future funding requirements, operational restructuring, stress testing of the balance sheet, consideration of management ability and their core objectives, amongst other areas.
For many carrying out a review of this nature is difficult, if not impossible. Firstly, given the time consuming nature of running a business many simply do not have the time. Secondly, most people are so heavily engrossed in the day to day aspects of their business they are unable to produce a truly independent and effective medium to long term strategy that will turn their business around. This is where management need to seek professional advice, and in partnership with a trusted and experienced advisor, produce a bespoke turnaround strategy that will allow the business not only to survive the short term but return to growth for the medium to long term.
What needs to be remembered is that a review of this nature should not just be limited to businesses that are struggling financially. Worryingly many businesses are still heavily exposed to the economic challenges that are still to come, without an effective plan for how to mitigate these risks and continue to meet their objectives. With growing fluctuations in the international money markets, ongoing public sector cuts, increasing changes to consumer trends and the obvious uncertainties surrounding the mechanics and timing of Brexit, management need to be agile and alert to these and the other challenges to come.