Main reasons behind UK companies going bankrupt advice, Property investing business plan
The main reasons behind UK companies going bankrupt
29 December 2023
In recent years, businesses in the UK have been hit by a series of damaging crises. From Brexit to the pandemic, many of these have posed existential threats to UK companies, forcing some into bankruptcy. In order to avoid getting into these kinds of situations yourself, it’s important to understand where others have gone wrong, so that you know exactly what to look out for. With that in mind, let’s take a look at some of the main reasons behind UK companies going bankrupt over the past couple of years.
One of the main reasons why UK companies are going bankrupt is market instability. A quick look at the past two decades will show that instability is part of the new normal; from the 2008 crash to the instability and uncertainty caused by Brexit, economic shocks are both common and severe. Many businesses fail to factor these fluctuations into their overall business plan, leading to a business that lacks the dynamism necessary for success.
In the face of such instability, it’s important to think about what kind of approach to business that environment necessitates. You need to make sure that your business is able to quickly pivot in the face of change, changing both what you offer and how you offer it.
In some cases, it’s possible to predict market fluctuations and changing consumer needs. In others, it simply isn’t possible – your business will need to have a capacity for adaptability built into its very fabric in order to allow it to continue operating successfully.
Poor financial management
Ultimately, bankruptcy will often be the direct result of poor financial management. Whether you haven’t saved enough to pay your taxes, or your business has invested too much too soon in physical assets, making bad financial decisions can quickly leave your business in a very tricky situation.
To avoid this, one of the best things you can do is employ an experienced accountant. More than someone who simply makes your books nice and tidy, they should be able to see potential financial problems before they occur, suggesting preventative measures that could end up saving your business.
What to do in the face of bankruptcy
Businesses facing financial hardship need to take action. Just because things aren’t going well doesn’t mean you can simply abandon ship; quite aside from the fact that things may be salvageable, you have clear legal responsibilities to your creditors and stakeholders.
In most cases, it will be necessary to contact an insolvency practitioner such as Chamberlain & Co. They’ll be able to carefully investigate your company’s financial position, and then guide you through the necessary process, whether that’s applying for bankruptcy or going into administration.
While bankruptcy is becoming increasingly common in many markets, it’s rarely an inevitability. With careful planning and a well-thought-out strategic approach, you can create a business that’s able to weather proverbial economic storms. By remaining dynamic in the face of apparent crises, you can often end up coming out the other end even stronger.
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