What Are the Benefits and Drawbacks of Voluntary Company Liquidation?

When people involved in building a business agree to cease trading, it is called voluntary business liquidation. This step is taken is an ultimate measure to settle accumulated outstanding debts via selling business property and assets. This process is demonstrated through two methods –

  1. Members’ voluntary liquidation
  2. Creditor’s voluntary liquidation

The result is the same. To oversee the voluntary liquidation process and dissolve the company, a specialized liquidator gets appointed, usually with the consent of the creditors. On the contrary, in compulsory liquidation, the business gets forced to close by the court and creditors. Therefore it is better to choose a voluntary route, where the directors get freedom and control.

Benefits of Voluntary Company Liquidation

There is already an insolvency stress business experiences and an enforced compulsory liquidation increases the problems. There will be official investigations on the behavior of the directors during this phase, looking for unlawful activity proofs. Disgruntled creditors pressurize the liquidators to emphasize even the slightest errors.

  •       You gain control

On the other hand, company directors have more freedom over the voluntary business liquidation process. The directors can appoint the liquidator. You can do some background check and pick the right liquidator. This can make a huge difference in navigating the liquidating process.

  •       Your personal liabilities get protected

A liquidator of your choice means you get protection from personal liability claims and unfair trading allegations. Voluntary company liquidation reveals that you are taking proper steps in the best interest of your business. It prevents the directors from taking full responsibility for the outstanding debts, which otherwise you may become responsible to pay if you ignore to cease trading.

  •       Enjoy a fresh start

The outstanding debts get written off as well as relevant legal action gets halted. The proceeds from the sale of assets will cover the staff and creditors. Bankruptcy process stress, as well as the concerns to handle dissatisfied creditors and court pressures, get averted. The director is free to plan a new business venture without any tag-on.

Voluntary business liquidation means you eliminate disturbing court appearances.

Drawbacks of Voluntary business Liquidation

As soon as, the decision to undertake voluntary business liquidation is taken all the commercial trading activities get terminated and windup starts. This is a hard decision because it can impact everyone associated with the company. Every business assets get sold to repay the creditor’s dues.

The voluntary business liquidation process means the director is responsible to make arrangements for the shareholder meeting and conduct the voting process. On agreement, it is crucial to appoint a reliable liquidator. The process cost can be in thousands depending on the complexity of tasks involved.

Directors conduct get investigate and even if you have done nothing wrong, you can be prosecuted. Some directors offer personal guarantees on overdrafts or loans. The creditors will be responsible for this on the initiation of the liquidation process.

Liquidation is not a great experience for any business. Insolvency Experts offer good advice, which helps to minimize losses and stress during this hard phase making navigation a little easy.

5 Things Your Small Business Needs To Remain Stable

Congratulations – your business is up and running! After months of hard work and research, you have launched your business, brand, products, and services.

The hard work doesn’t stop, however. No matter what your market, remaining competitive and lean is key to business success and stability. But what five factors do you need to pay attention to?

1. Promote, Market, Survive

According to statistics, as many as 8 in 10 new businesses will fail in the first year. But just because you have passed this milestone doesn’t mean your business is destined for great things without any effort.

Businesses fail at any point in their lifespan. For a small or new business, maintaining cash flow is important (see the next point!) but most new and small businesses fail because they fail to continually promote and consistently market their business because they fail to budget for either of these things.

And the reasons for failing to do this are financial.

2. Financial Management and Control

For any business, a large factor in their success is money and the largest factor in their demise is lack of money or lack of cash flowing into the business.

But it is more than this. Failing to control money, to understand where your money is coming from and going to, what your largest overheads are, who have paid their invoices and who hasn’t… the list could go on…

Bookkeeping, totting up receipts, chasing invoices and other forms of credit control are the details of running any business, no matter how large or small. Getting is wrong may not spell imminent disaster but it certainly dents your business, stunting its growth and evolution.

5 Things Your Small Business Needs To Remain Stable

Xero bookkeeping is a method of understanding the financial position of your business in real-time. You can see, at a glance, financial information relating to performance this month compared to the same time last month, last year and so on.

When you have the financial information, when you forecast bumps in the road financially, you can better prepare your business to ride out the rough bits of the journey.

3. Controlling Growth

As a business owner, you have many objectives, one of which is to grow the business. The early months and years are tough but one day, all that effort will pay off.

The problem is, it may pay off too quickly and too much. Growth that is allowed to spiral out of control is just as bad as no growth at all.

Controlling growth means keeping your business stable by balancing the opportunities and the challenges that are presented. Managing growth is an important aspect of managing any business and financially, it is imperative that you maintain a balanced view of assets and investment.

5 Things Your Small Business Needs To Remain Stable

4. Forecasting

Continually looking ahead is no bad thing in business, just as reviewing and critiquing where you have come from can be an important lesson too.

No one has a crystal ball to look into the future to predict what market conditions will be like in 5 or 10 years’ time but, as an entrepreneur, you need to be looking for where the next opportunities and challenges could be coming from.

Have you made plans for when a competitor bursts onto the scene, for example? Do you have contingency plans for changes in technology? These are just two examples of opportunities and challenges you could face.

5. Understanding your Business and how it Matures

The take-off phase doesn’t last forever. At some point, your business will morph into a stable, mature company and this takes a different kind of management and outlook. Are you ready?

Key Insights into Your Business

Success in the world of business is based on understanding. Understanding the market, understanding your competitors, understanding your customers are all vital, to help you make the decisions about you’re selling, for how much and when.

The most important thing you need to understand, the one thing there is no excuse for not knowing inside and out is your own business. You have to be an expert, not merely in what you’re selling, but the structures you’ve set up to do that: the teams working under you, the key relationships that keep the wheels turning, from people providing raw materials or products to the big clients you sell to. You also need to understand the brand you’ve built.

Branding

Nearly everything you do affects your brand. It’s not merely a logo or what appears on your advertising. Your brand is the picture created by every single interaction a member of the public has with your business, from seeing a poster in a train station to their experience of returning a faulty product.

You need to know how the public think about your brand to make sure you’re making the right decisions – you might need to raise prices to accommodate raised costs, but if that price raise erodes the brand you’ve built up you stand to lose much more!

A market research company is vital to finding out what consumers think of you. Click to find out more about working with one.

Your Own Team

It’s more than a matter of trusting the people who work for you. You need to know what they’re capable of day to day, how long you can expect them to get their heads down and go into crunch for, and who’s hiding talents that could make the difference for you.

The key to this is a robust reporting process, and an enthusiastic HR staff working on feedbacks and one to ones. The difficulty of breaking down the work people do can vary depending on what their responsibilities are. Manual, rote tasks on an assembly line are relatively easy to quantify. Calls with clients or meetings are less so. Eventually though, you should be able to at least estimate how many hours of work a task represents, and how many man hours you have available to you in a typical working week.

Try not to let the amount to do exceed the time to do it in too often: people will go into overtime occasionally, because they’re willing and committed, but if it happens to often you’ll use the loyalty that makes it possible.