Lack of working capital could ruin revitalisation
I WAS listening to the BBC’s excellent Wake up to Money programme on Radio 5 Live this morning.
Under the ‘good cop, bad cop’ questioning of presenters Andrew Verity and Mickey Clark today was Nick Hood from Begbies Traynor, a specialist turnaround company.
Nick, the executive chairman, was making the point that small businesses are at their most vulnerable at the end of a recession. “As they begin to grow, where is the working capital to support this growth?” questioned Nick.
An important question. Having survived the trauma of recession, Nick was making the point that small businesses need to start shifting their thinking from survival to growth…and how to fund that growth.
Perhaps disturbingly, and it picks up the point that John Jenkins, boss of the GE Capital operation in the UK made to me in Blog 311, the spectre of small business failure is very much on the cards.
“There are 215,000 small businesses who are not paying tax at the moment,” said Nick, referring to the government’s deferral scheme to help businesses through the downturn. “When this period of deferment ends, I think we will witness many small business failures.”
It’s a chilling thought. You make your way through a dreadful recession, only to trip up just at the end of the tunnel. But it might also be the time to face up to the realities of your business now. While there is still room for manoeuvre.