Danger: Look After Yourself In A Business Crisis
Danger: Look After Yourself In A Business Crisis
Managing Your Four Key Risks In A Turnaround - Part 1 Personal RisksAs a director or owner manager of a business facing difficulties, it is important to ensure that you manage your personal risks appropriately and these articles address how to approach this task by focusing on four key areas. 1 Your normal responsibilitiesDuring a crisis, you need to remember that as a director of a business you will continue to have all your normal responsibilities in respect of the company under all the normal legislation that applies to it, from health and safety and environmental legislation, through any industry or sector specific requirements such as licensing, through to the basics such as keeping accounts and tax records (and for directors, your statutory responsibilities under the Company's Act for filing accounts and completing an annual return).2 Abnormal levels of risk in your normal responsibilitiesSome of these can however become particularly acute when a business gets into difficulty. One particular area to be aware of for example is employment law and its requirements for consultation, as in turning your business around you will undoubtedly need to make changes that relate to people, from how they do things and who does what, under which terms, through to who is still working for you at the end of the process. But employees have a wide ranges of rights under Employment Law in respect what changes can be made to working arrangements and the processes that need to be followed to introduce these. Failure to adhere to this legislation can leave you vulnerable to action through employment tribunals and potentially significant costs to your business. This is not an issue that arises specifically because the business is in difficulty, as these are risks that any business runs when looking to change employee arrangements, but they are an area where firms in distress become exceptionally vulnerable due to the need to push through changes.3 Exceptional levels of personal pressureThere are four basic fears that many of us share in varying degrees and the stress of dealing with a business in difficulty can bring these to the fore. So, if I fear one of these key concerns, then in a crisis, I can feel:- Failure - I've failed because the business is in this mess- Rejection - My customers are ungrateful because they don't value me and my products any more- Instability and uncertainty - I am worrying all the time whether we are going to make it through or not- Conflict - I am having to fight the bank and say no to creditors all the timeThe fact is that, unless you absolutely thrive on seemingly impossible challenges (the blacker the better), having your business get into difficulty is going to be a stressful, depressing, and difficult experience that is going to put a strain on you, your family, and your employees.So these as valid appropriate reactions and emotions to have and you need to recognise them as such. After all, if you did not get upset about the fact that your business is in difficulty, what would that say about you and your commitment to it? But in doing so you must also:- prevent these feelings from overwhelming you and preventing you from taking action; and- preserve your own mental health.You are your business's most important resource when it comes to restoring it to health. If you don't do it, no one else will do it for you. The surest way to guarantee that your business will fail is for you to give up trying to save it because it is 'all too difficult', 'there is nothing you can do', or 'you just can't cope.'A crisis will often lead to the owner feeling depressed or stressed (and the symptoms of excessive stress can also manifest themselves as a form of depression). If this is the case you should see your doctor to get professional help to get you through this period.4 Insolvency specific risksFinally, there are also specific 'insolvency' related risks to you as a director which can lead to potential personal liability and/or listing on the directors' disqualification register and these will be discussed in more detail in Part 2 of these articles, while Part 3 will cover the risk that you can be held personally liable for your company's arrears of PAYE.Of course the information contained in an article like this can never be a full statement of the legal position as the relevant laws are complex and liable to change. This article can only therefore be a general guide as to the issues involved and as these can have serious implications you should always seek appropriate professional advice on your own particular circumstances before taking any action.
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