GUEST ARTICLE: Why your business is struggling right now, and what you can do about it

By Rik Heap, Director at Leonard Curtis

Stats around business failures make for uncomfortable reading, particularly for those who feel mounting pressure.

At Leonard Curtis, we provide directors of struggling businesses with positive strategic advice, enabling them to retain control. So, my first message to anyone who feels their blood pressure rise at the notion of business insolvency is to keep reading – we’re here to help.

The latest seasonally adjusted figures show that 5,747 companies became insolvent in the first three months of 2023. While this was 4% lower than the previous quarter, it was 18% higher than the first quarter of 2022 and 37% higher than the same period in 2019 – before the pandemic.

They also show the majority of insolvencies (4,739) were creditors’ voluntary liquidations (CVLs) – a process where directors close their business voluntarily. Such a route is at its highest quarterly level since records began in 1960.

There are various reasons for this, with a myriad of social and political factors at play. During the pandemic, we saw a decline in numbers because the ability to take enforcement action was taken away from creditors. Businesses with empty order books were, in reality, insolvent, but because there was no external pressure, many of them thought they would ‘see how it goes’. Landlord evictions were also prohibited. Since the pandemic, these restrictions have been lifted and we are now seeing significant numbers of statutory demands and winding up petitions from HMRC, amongst others.

Meanwhile, Brexit, the war in Ukraine and the ongoing cost of living crisis have made an already challenging climate even tougher.

These factors may have been enough to cause real, lasting damage to your business. Even if you have weathered the storm, you may be suffering from director fatigue. Many directors will feel that their business has faced an onslaught of challenges over the last few years – this has been an era of constant firefighting. The need to adapt, juggle and recalibrate repeatedly has taken its toll.

If these challenges resonate with you, the first thing to note is that you aren’t alone, there may be steps you can take to recover your business.

It’s essential to take stock of where you are and what’s happening in your market, bringing the senior team together to decide what’s been learnt so far and how you must adapt.

You must also act quickly. The longer it takes to acknowledge difficulties, the quicker they accelerate and the more problematic they become. Often, by the time debts cannot be repaid, options are very limited. The two things that will ultimately determine the outcome will be cash flow and time. Maximising available cash flow to provide the time to take remedial steps is a priority.

This may seem insurmountable, but it’s what we do. Taking stock can sometimes be hard for directors, buried by the pressures of keeping the business afloat. So, ask for help.

A key message is don’t fear an insolvency process – rescue is always the priority. Confusion surrounding an insolvency process, and fear of the consequences of seeking advice from a corporate recovery professional, means that many owner-managers often leave it too late to get help.

What’s crucial throughout this whole process is honesty. Business owners must be frank about what they hope the outcome will be and what led to the business falling into distress.

We see people come to us who are so worried that they aren’t sleeping. First and foremost, we advise them not to do anything hasty – then talk to us so we can work through all their available options.

Business owners want to preserve value, protect their employees and retain control where possible. Our job is to work with management teams and their advisers and come up with credible solutions to real world problems and hopefully get a business back on its feet.

To discuss your business with us, contact Rik on or 0161 831 9999.