Macks Advisory has observed trends and read research that has highlighted to us several of the key characteristics of corporate collapse. Through this research we can help business advisers identify these characteristics that may, if acted on quickly, help avert business failures.
The key characteristics are:
- Construction Industry
- Small Manufacturing
- Property Development
- Small Retail
- Less than 15 employees
- Turnover of less than $1 million p.a.
Most Common Reason:
- Bad Debts (sometimes a domino effect of other insolvencies)
- Management failure:
- Over optimism in planning
- Imprudent Accounting
- Lack of working capital
- Management says the failure was unavoidable. They could not have taken steps to prevent it
- Larger companies have more successful turnaround options.
The conclusions that can be drawn from the above are that small businesses in inherently risky sectors may be struck with unavoidable problems that bring them into financial strife.
In the experience of Macks Advisory, early intervention and assistance by insolvency experts will greatly assist the chances of these businesses surviving. In past years the use of the Voluntary Administration mechanism has greatly assisted companies with good management to survive the impact of unavoidable problems that strike many small businesses.
Macks Advisory is a firm that practices exclusively in the areas of insolvency and business reconstruction and members with queries are invited to contact Peter Macks at Macks Advisory on 08 8231 3323 or to [email protected]