The Video Transcription:

Hello and welcome to our website. My name is David Murray. I’m Ireland’s only Financial Surgeon. The best way to explain this is if you or your business owe 2 million to banks or suppliers and genuinely you only have €100,000 left, and I mean GENUINELY, then we will negotiate with your bankers and your suppliers to accept this €100,000 and to write off the 2 million. This will allow you and your business to continue to trade in the future.

I’ve been operating on business clients for almost 30 years. In fact, in one 25 year period, I claim never to have lost one patient on the operating table. And I’ve no intention of letting your business fail.

I want today to explain my Top 10 Tips when a business is in financial trouble. I’m going to explain these tips 1 to 10 here now and then later I’m going to explain these concepts in more detail in bite-sized video clips.

  1. Do not be an ostrich.
  2. Advise your bankers early.
  3. Do not be an employee coward.
  4. Sharpen your scalpel.
  5. Prepare a break-even business plan.
  6. Reduce your lease payments.
  7. Term loans – convert them to interest only, even if it’s only for a period.
  8. Prepare realistic payment plans.
  9. Make sure you pay yourself and the directors weekly – very weakly.
  10. No Matt Talbot or Jonah syndrome.

1. Do not be an ostrich.

There’s no advantage in burying your head in the sand and pretending that this is not happening. It is happening so you have to wake up, take control and do something positive. Even if the positive thing is something small like returning the water cooler. It brings you into the mindset of saving your business.

2. Advise your banker early.

The natural inclination is to keep bad news away from your bankers when the business runs into financial trouble. Banks have more respect for businessmen who advise them early, keep them informed about their difficulties. In fact, banks consider businesses that hide away their difficulties are really only commercial dreamers and are unlikely to have what is necessary to steer the business to safe land.

Bankers in recent years have learnt that being trigger happy is not always the best result for their bank.

3. Do not be an employee coward.

It is only a coward who would wait for the liquidator or receiver to lay off the employees when it’s all too late. The laying off of hard working, loyal staff is one of the hardest tasks in business. But the staff would prefer if it was the principal himself who let the staff go rather than some faceless junior from the receiver’s office.

4. Sharpen your scalpel.

There is no future for a leaking bucket business which continually makes losses. When that is the case then no matter how much funds are pumped into the business from directors, shareholders, bank overdrafts, grants, the end result will still be the same – an empty bucket and a failed business.

It is important to have a sharp scalpel and to cut deep into the overheads. This would give the business a fighting chance for survival.

5. Prepare a break-even business plan.

The first starting point of full recovery is to prepare this break-even business plan. It may seem a luxury to be preparing a business plan when there’s a financial and business hurricane outside. However, it is important for the captain to be below deck plotting a course to safe and dry land.

Brave and valiant efforts will be wasted in the absence of a plan to safe destination. Preparing the business plan focuses attention on the quickest route to business safety. When the business is on safe land then it can plan and prosper thereafter, in the knowledge that it’s safe to do so.

6. Reduce your lease payments.

The equipment and plant and machinery of the company will be useless and will not be wearing out as much during the business downturn. The leased assets will last longer. Therefore, it is reasonable to extend the term of your lease and reduce your monthly outgoings of lease payments.

It is very important to preserve all elements of cash flow during a financial crisis.

7. Reduce term loans to interest only.

The cash flow consequences to the business of trading losses are exacerbated by making high capital repayments at these difficult times. Reach amicable agreement with your bankers to reduce these term loans to interest only. This can be for a temporary arrangement even if it means that later repayments will be higher by spreading the miss period over the remaining term of the loan.

Bankers are more receptive to interest only arrangements for a period as the loan balance does not get increased and is therefore not impaired and the interest charges are not increasing the loan balance.

8. Realistic payment plans.

It may be necessary to reach agreement with your suppliers for payment plans. It is very important that these payment plans are realistic and are capable of being achieved. Suppliers prefer realistic payment plans which are upheld rather than well-meaning, over-optimistic promises which fail after a couple of months.

It is a common failing of businesses in financial trouble. They wish to do their best as soon as they can for those suppliers who have been patient and supported them with supplies over the previous months.

The primary obligation is to survive so that you can pay back those suppliers and provide them with continued gross profit trading opportunities with your business.

9. Directors salary – weekly.

The primary people who can assist to get the business out of its financial difficulties are the directors. It is impossible to give 100% to this task if the family at home are starving or the electricity direct debits are bouncing and causing stress at home. Therefore, it is in the interest of the business and the creditors and suppliers that you ensure that each week the minimum amount after eliminating luxuries are paid to sustain the family household.

10. No Matt Talbot or Jonah syndrome.

It is not your fault that there has been an economic collapse or coronavirus which has resulted in your business being unable to meet its obligations. Stop persecuting yourself. You need to do your best for your bankers, suppliers and employees and this in turn will help you. Throw away your chains, throw yourself into the business and help it survive. And good luck.

I want to leave you with the famous quote in business troubles. The most famous liquidator in UK history was a guy called Sir Kenneth Cork. He wrote the Cork report on which the comprehensive 1986 UK insolvency legislation was based. He was once asked what’s the first sign of a company about to go into liquidation. He answered as follows: “The first sign of a company about to go into liquidation is when you pick up a copy of their annual report and there’s a picture of the chairman getting out of a helicopter at a brand new headquarters.” That’s the first sign of a company about to go into liquidation.

Therefore, the moral of the story is: “Be flash with your deposit account book and not your BMW”.

Download the “Top 10 Tips” PowerPoint Presentation below.

David Murray

David Murray

David is a fully and Highly Qualified Financial Accountant with an unblemished record for almost 30 years.

David has an extensive Academic Record including, inter alia – Gold Medal College of Commerce – First Place Chartered Accountancy (ROI) – Fastest Graduate to Qualify.

David has written many articles on International Trade Finance in Magazines and Sunday Business Newspapers. In addition, has been Late Late TV Show Tested on cases referred by them.

David has extensive Business Experience particularly in Property, Construction, Manufacturing, Equipment, Telecom, Service Companies, SME Sectors in Ireland, UK, Dubai, Poland, etc., Agent in Ireland Bank of Iran, Plc Bank Seminars “Finance for Builders”, etc., etc.

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