Director fatigue adds to challenge of plotting recovery for West Midlands business owners

Joph Young, Insolvency Practitioner at Leonard Curtis Worcester, says ‘director fatigue‘ is now hitting some business owners and affecting appetite for the fight.

Plotting a road to recovery remains a huge challenge for many firms, and forecasts for 2022 paint a difficult picture, especially with the big societal squeeze on finance in general.

Business owners who have shown great resilience through two years of unprecedented challenge are now being hit with an unexpected by-product – fatigue – which is affecting the road to recovery for some.

One of the questions we always ask owners of distressed businesses is ‘Do you have the appetite to carry on?’. There is no judgement in it, just a simple question, and for some it is simply the end of the road and there is peace in that. Our priority is always on delivering the best possible outcome whatever the circumstances.

There are many different ways in which you can move on – you might want to hand the business down to the next generation or consider selling all or part of it – we have seen plenty of businesses consolidating in the last 24 months, recognising strength in numbers and new opportunities from scale and shared expertise.

The best way to ensure that you do what is right for you and your business is to make sure that you are aware of all of the options (both formal and informal), including the benefits and risks of each, to give you peace of mind. We always focus on rescue and recovery whenever we can and make sure we act fairly for all parties.

Sometimes the solutions might not seem obvious, but there will always be one, it just might not be what you are expecting.

For those who wish to continue with their business, the bumps in the road certainly keep on coming. Supply chain pressure, inflation, rising energy prices and landlords now demanding payment plans around rent arrears continue to challenge the most resilient of directors.

When it comes to financial difficulties we always say ‘Acknowledge them before they escalate’ – as cash flow pressures increase, options typically tend to decrease. But even then, it does not necessarily mean disaster.

Simple things like taking a step back, seeing if you can generate cash from unnecessary or underutilised assets, ending one or two non-essential relationships, exploring restructuring options, taking specialist advice and considering all the finance options available, will certainly help. However complex the situation, the advice we give is always client-focused, simple and non-judgemental. And by working together, we’re able to provide a support network for future planning.

The government has recently responded to calls from the insolvency profession to provide greater guidance to directors on what steps to take if they are concerned their business may be facing insolvency.

The Insolvency Service has issued this useful guide, entitled Company health check: keeping your business on track, to help directors make sure they are acting in the best interests of their business and its stakeholders should their company face insolvency.

The guide offers some practical help on areas such as:

• Directors’ duties
• How to tell if a company is insolvent
• Directors’ responsibilities and actions that the Insolvency Service can take if directors do not act responsibly
• Directors’ loans and Bounce Back loans

It provides some really useful guidance at a time when an increasing number of directors are concerned about the health of their business.

We know that each case differs and so would always recommend that business owners take advice as early as possible in order to maximise the available options and remain in control.

So don’t leave it, talk to someone you trust, decide on your actions, and take a positive step towards recovery in 2022, whatever that might be.