London based web design company
This business had been trading for many years and had a great reputation and customer base. However when the recession hit turnover dropped but costs remained the same. After over a year of trying various ways of increasing turnover it was apparent that it was not going to bounce back any time soon.
The problem the business had was that it still had the same number of employees and same overheads as when the turnover was much higher. When we visited them we looked at a number of different options. Their only debt was with HMRC (VAT and PAYE) and although it was a relatively small amount it was still an amount that the business could not afford. They were also tied into a long term and very expensive lease on their premises which was now too big for them.
After discussing the different options with the Directors it was decided that the business could not continue as it was. The current business was not viable but if they could reduce overheads, reduce the number of employees, get rid of their debt and lease but keep their customers then the Directors were confident they had a sound business going forward. A plan was put in place that over the next 2 to 3 months saw a new business formed and the things that were important to the Directors were retained. The old business was liquidated and all the debts and the liability for the lease disappeared. The Directors now have a new company without the overheads and without the debt but have the staff they need and although turnover is down from what it used to be profits are up.
We had spent years building up a great reputation and didn’t want to lose that or our customers. We had heard of liquidation but assumed that if we went down that route everybody would find out about it and we would lose everything we had spent years building up. In reality the only people that found out were the people we owed money to which was only HMRC and the landlord so that didn’t really matter. Our customers have all come with us and we now only have the number of staff we need and our overheads are greatly reduced. The whole process from start to finish was exactly how Business Advice Services said it would be and they were on hand at all times when we had any questions or concerns.” – JT, Director