Many phoenix operations fail. It’s not that easy to make a phoenix succeed.
Trusting to luck or assuming things will somehow improve once the company’s debts are written off does not work.
Here are our top tips for making sure your phoenix business won’t go the same way…
- You might find it difficult to get all the support you would ideally want from your bank, customers, suppliers or even key employees. They could reduce the support they’re willing to give or even shun you entirely. Insolvency is divisive, people tend to look after their own interests first and foremost: for example your customers could use the failure of the business to re-appraise what they do, how they do it and with whom. You will lose some business, it’s inevitable. Plan for the worst, hope for something better. Ask yourself what support you need, and from where, for the business you want to create. Then go get it, even if it means giving something away.
- Although freeing a business of its debts deals with the symptoms of its problems, it doesn’t deal with the causes. Identifying the causes for the problems of the business often means real soul searching. You may need to bring in more help or resources. You might need to improve your own skills. You might need to stop doing something or start doing something differently. Do you have all the entrepreneurial, managerial and technical skills, in the right mix, to succeed? – your business is only as strong as the weakest of your skills in these key areas. Are you prepared to make all the changes you really need to?
- There are major issues re-using a liquidated company’s ‘name’: not dealing with these in the best or proper way can lead to personal liability for the debts of the new business and a criminal record. Do not ignore these rules, implement a properly considered plan for dealing with them;
- Obtaining the right level of funding can be a real problem. Some banks won’t touch phoenix operations on any terms.
How much money do you need? Add 50% more than you think, then ask yourself how you are going to get it? Think about looking at alternative sources of finance, sources you haven’t considered before. But be careful, sources such as Funding Circle get personal guarantees, and you could end up in even worse problems.
Only by fully investigating these issues with a firm interested in securing a long term solution rather than short term fee will you give yourself the best chance of things working out second time around.