So what went wrong?

The most common reasons why businesses fail

“If you fail to plan then plan to fail”. A well-known phrase that everyone in business should have hanging in a prominent place as a reminder that operating a business carries risk as well as reward.

Nobody takes that brave leap into being self-employed thinking their business will fail within the first two years. However, many start-ups find themselves in difficulties within this time frame, generally as a direct result of a failure to plan.  I appreciate I will not win many friends by saying this but the business acumen in this country is poor and the general knowledge required absent.  If I had a pound for every time a director referred to the assets of a limited company as his assets when they are actually company property………

Putting it another way, if you build a house on poor foundations then you can expect that house to fall down eventually. Similarly, if you do not start a business on sound footing from the outset you are promoting failure.

This article could dominate several pages if I were to go into any real detail but, generally speaking common areas leading to difficulties in the near future of a start-up include:

  • No business plan (including cash flow forecasts) from the outset. If you have a business idea then putting that down in writing should inform you if that idea is viable and what is likely to be the requirements. It also supports any application for third party funding, such as from banks.
  • Choosing the wrong trading vehicle (e.g. limited company, partnership etc.).
  • Over-borrowing from the outset, leaving start-up costs creating a financial commitment that eventually becomes a burden too great.
  • Not registering for VAT or PAYE. In one case I handled the company had been over the VAT threshold requirements for three years yet was not VAT registered. It was one of the grounds for him receiving a custodial sentence!
  • Not accounting for receipts and payments properly.
  • Entering into contractual obligations without fully understanding the implications.
  • No trading terms and conditions upon which to fall upon when things go wrong.
  • Not monitoring cash flow. Most business failures have reached a stage where cash is exhausted so they cannot pay the bills.


The advice to any would-be new business owner is to take advice. Speak to an accountant who can help you determine what the appropriate trading vehicle for your business is, assist with VAT registration and guide you through how to ensure your day-to-day accounting is correct.  Equally, a commercial solicitor can draw up your terms of trade that maximise protecting your business interests and can steer you with regards to any agreements you are asked to sign.  Finally, do not overlook the role of commercial banks as they can assist in the most appropriate form of funding the business, both at start up and going forward.

I use a phrase, “You do not have a dog and yet bark yourself.” Unfortunately, all too often business people come to me and it is clear they have not grasped that concept.

If you require any advice or assistance on mediation matters, or any other insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss your situation. Call Gary Pettit or Gavin Bates on 01604 212150 completely confidentially.

UPDATED TOTAL- Charity Walk Completed!

Kym and Jamie completed their 80 mile charity walk for Ronald McDonald Houses earlier this month. They have currently raised £2,047 and have therefore exceeded their amended target of £2,000, which itself was double their original goal.


Kym’s daily blogs, reproduced below, provide the highlights of their four days walking:


Day 1 blog: I’ve seen Wembley Stadium, Regents Park, Grenfell Tower (so sad), nesting moorhens with chicks and swans with cygnets, a green woodpecker, some handsome dogs (shame about some of the owners) and a lorry driver about 3ft away mount the pavement and take out a bollard (male naturally)! I’ve learned that London cyclists are rude and my efforts to teach them manners whilst amusing for me, were largely wasted, Jamie can’t multi task and his attempts to look at his glasses while holding a drink meant that I would end up wearing it! I’ve learned that Billie-Marie is back in Alder Hey which has made us more determined and that there are a lot of generous people out there, thank you so much to everyone who has donated. Day 1 done we’re on our way home tired and dirty. Day 2 starts at 7am tomorrow as we had to cut today a little shorter than planned because Jamie somehow has managed to lock his lovely wife Naomi out of their home!


Day 2 blog: Tough today as the heat made it hard! Today we’ve seen 3 herons, a red kite and a couple of guys appearing to be picking nits from each other’s hair! It was a more picturesque walk today along the canal path, a lot less pavement pounding. Well-mannered cyclists, friendly people except one rude guy at Watford where we also saw the days first builders bum and thankfully the only one! Is that really necessary? Must be quite uncomfortable and draughty! Jamie is suffering nasty blisters today and I have put the blister pack “in a safe place” but can’t remember where! Sorry J! Our other silly moment was forgetting to pay for parking in Northampton! Oops! Half way through now time wise though a few more miles to cover the next 2 days so early start tomorrow for day 3! We can do this!!


Day 3 blog: Off to an early start today at Tring. As my back and shoulders are surprisingly sorer than anything else I’ve decided to ditch the back pack, use a bum bag and let Jamie carry the weight! Not sure this look will catch on again so may try to up the game tomorrow and rock in socks and sandals as well! The new waist attire has taken a soaking with Jamie’s 2nd throw of a drink over me as has my phone! Today I’ve seen the most beautiful countryside and my senses have been assaulted by the less pleasant aromas that come with it! I’ve seen horses running together, a couple of boat cats, stunning wildlife and a doberman belly flop into the canal to chase geese which naturally flew away leaving the dog unable to get back out again! Help was at hand and all ended well but it was funny. Everyone we’ve met has been lovely despite Jamie’s groans of pain about his blisters! In fairness they are really bad poor lad. My legs are feeling it now but we’re almost there and I’m determined to finish even if I do so on my hands and knees.

Day 4 blog: Off to an early start again and just finished! Woohoo 80 miles over 4 days completed with lots of laughs and groans of pain along the way. Today I managed to spill my own drink on me, thought I’d give Jamie a break from doing it! We’ve had donations from strangers including the owners of Zack the greyhound who took a liking to me, seen beautiful views including common terns, had a close encounter with a heron and learned that the names Rosie and Jane appear on more barges than any other name. I have asked myself over the last few days why I accepted this fundraising challenge from someone almost 30 years younger than me but we’ve done it! Would I do it again, hell yes! Growing old is compulsory growing up and acting your age is optional and the latter is my choice and the way I plan to continue. Most importantly, we’ve almost hit our target for Ronald McDonald House which is an amazing charity that gives so much help to families of sick children, more than I can begin to explain. Heartfelt thanks to everyone who has donated and to you all for your support and encouragement, much appreciated.

To donate, please click here.