Being in financial distress is incredibly worrying for any business owner. When you’re facing County Court Judgements (CCJs), mounting debt and the possibility of insolvency, it can seem like there’s very little light at the end of the financial tunnel. The latest report from insolvency experts at Begbies Traynor shows a record number of UK businesses finding themselves in financial distress. Numbers have increased by 50% from September to December 2024, with 46,583 businesses falling into the category. But finding your finances in this perilous state doesn’t have to be the end. There are ways to mitigate the damage and get your business back on track. What qualifies as ‘financial distress’? Financial distress is defined as ‘being in significant difficulty in meeting your financial obligations’. In essence, it will usually mean that you no longer have the cash or liquid capital to pay your bills, cover payroll costs or repay your debts. But what causes a company’s finances to get into such a dire state? Insufficient cash flow A lack of cash is a primary cause of financial distress for many affected businesses. Unexpected expenses, delayed payments from customers and rising costs can all contribute to this negative cash flow position. Declining sales revenue A drop in sales also means a drop in revenue. This can be due to increased competition, changing consumer preferences or economic downturns. With less money coming in, you lose the ability to meet your financial obligations. Rising costs Skyrocketing costs of raw materials, labour or energy can all have an impact. Higher costs and expenses eat into your profit margins, putting major strain on your cashflow and leaving you unable to cover your key outgoings. Excessive debt High levels of debt, particularly short-term debt, will lead to high interest payments. These increasing interest rates make it difficult to meet your financial obligations, and also make it unlikely that lenders will offer further funding. Poor management decisions Some of the causes of financial distress come from macro, external conditions. But poor strategic decisions, ineffective marketing and inadequate financial planning also play a significant part. Talk to us about overcoming financial difficulties If debt is mounting and your cash flow situation is looking dire, the time to take action is now ! The sooner you tackle the financial issues in the business, the sooner you can start to bring your debts under control, and your cash flow back to an acceptable level. Come and talk to the team about your financial worries. We’re here to help you get back on track and to secure the future of your business as a viable enterprise. Call us on 01904 787 973 or book a discovery call with Donald Inglis .

Being able to evolve over time is vital if you want your business to last. The market doesn’t stand still, so it’s important to diversify and to keep your offering fresh. You may well have a product range and a customer base that’s ticking over nicely. But customer and market needs can change very quickly. Blockbuster, for example, had a huge international business, but the invention of on-demand movies killed that business in just a few years. If you want to bake longevity into your business, it’s crucial to keep moving and reexamining the value that you bring to your audience. Here are five potential strategies for diversifying your business: 1. Introduce new products or services Expand your offerings by developing complementary products and/or services. This could mean bundling existing offerings, or creating entirely new lines to cater to existing and new customer needs. 2. Diversify into new sectors It’s easy to get comfortable in your existing market niche. But you’ll find more opportunities by entering new, related or unrelated markets. This cuts your reliance on a single market, cutting down the risk of putting all your eggs in one basket. It also introduces your brand to a whole new customer audience. 3. Deepen your market penetration Going deeper into your existing target market can reveal a whole new audience. Think about what you can add to make your offering more attractive. Put cross-selling and upselling strategies in place to increase the sales potential from existing and new customers and listen hard to customer feedback. 4. Expand into new territories Having a new market to sell into is a great way to boost your sales opportunities. Find an international market that has a relevant customer demographic and tailor your products and services to this new foreign audience. Bear in mind though the compliance, customs and tax requirements of going international. 5. Form strategic partnerships Your reach and revenue potential is greater when you collaborate with other businesses. Entering into a partnership helps you offer joint products or services, leverage your partner’s customer base, or explore new distribution channels. This could be a partner in your existing market, or in a complementary market. Talk to us about diversifying your business offering If your aim is to optimise your business, diversification is a real must. It introduces you to new sectors and audiences, increases your sales opportunities and reduces risk. Talk to our team about ways to diversify your offering and add a new angle to your strategy. Call us on 01904 787 973 or book a discovery call with Donald Inglis .