Neil Bennett, Director at Leonard Curtis, who has been working in turnaround and restructuring for over 38 years and is a specialist in the retail sector, shares six steps for furniture retailers to consider when under financial strain.
Furniture retailers benefitted during the pandemic as customers switched their spending from holidays to home improvements.
However, this is unlikely to continue as the world gets back to normal. And with rising material and energy costs affecting consumers and retailers alike, we are seeing significant numbers of furniture companies experiencing cashflow pressures.
At Leonard Curtis we’ve most probably encountered every conceivable financial issue facing businesses, and one factor remains the same in every case. When it comes to saving a business, identifying the warning signs early is invaluable. By knowing what to look out for – and what subsequent steps to take – a business has more time to react to any issues.
The longer it takes to acknowledge financial difficulties, the quicker they accelerate. By the time a business is unable to pay its debts, options are often very limited. But even at this stage, it’s important to bear in mind that distress does not necessarily mean disaster.
For those concerned with their company’s cashflow issues, here are six steps to help take back control:
#1 Take a step back
It’s difficult not to panic in times of financial distress. But taking a step back from the situation usually makes it easier to identify possible solutions as well as reducing the risk of making rash decisions that exacerbate it further.
We recommend all key stakeholders are brought together as part of this process – playing their part to secure a stronger financial footing. We are most often approached at this stage – giving those who are closely involved some breathing space as well as the necessary specialist advice. At these initial meetings, key issues that affect a company’s finances are analysed and solutions developed to tackle the most pressing financial concerns.
#2 Liquidate unnecessary assets
It’s almost always necessary to be proactive when faced with significant financial problems. One approach is to liquidate any non-essential assets – helping to raise cash, satisfy creditors and overcome the worst of the debt-related issues.
It’s essential to have a clear understanding of which tangible assets are not vital to your business. As well as offloading any non-essential or old stock, liquidating the likes of equipment, tools, vehicles or property assets, can provide a potentially vital lifeline.
#3 End non-essential relationships
When a company is under severe financial pressures, tough decisions must be made for its longer-term interests.
This could mean letting go of relationships with trusted suppliers and customers. This can be a difficult and distressing process, but it is advisable to make these tough decisions whilst the decisions are yours to make.
#4 Look into restructuring
Restructuring a business can give it a new lease of life – re-focussing on areas that deliver more sustainable returns. To present a viable route forward for a company and its finances, a full-scale restructuring plan should be created – including details of debt management and consolidation strategies.
#5 Get specialist advice
Getting specialist advice on the most pressing areas at the right time can make all the difference in terms of successful debt management and overcoming cashflow pressures. Trusted impartial and expert advice is always available for companies in all levels of distress. This third-party support and guidance makes a significant positive impact on the outcome.
#6 Consider all the financing options available
Companies without strong credit ratings – and those rejected for loans by mainstream lenders – should consider alternative finance options to potentially overcome funding issues.
Invoice factoring and discounting, asset financing and refinancing are all viable considerations.
From 21 offices across the UK and the Channel Islands, Leonard Curtis provides directors of struggling businesses, their stakeholders and professional advisers with positive strategic advice to enable them to retain control of their business. However complex the situation, the advice we give is always simple and non-judgemental. And by working together, we’re able to provide a support network for future planning.
Visit www.lcbsg.co.uk or call 0330 0243 999 to speak with our team.