Don't panic, but do think ahead

Sep 26 2008 by Matt Collen

 In the present economic climate, businesses must hope for the best, but be prepared for the worst, argues Matt Collen, partner with commercial law firm Muckle LLP

ECONOMIC storms are blowing in faster and with greater severity than anyone predicted, or feared. In these circumstances, there’s certainly no need to panic, but the prudent business will be looking at how it will weather the months ahead.

At Muckle LLP, we have a team of seasoned, senior professionals which can provide the practical advice across all disciplines to businesses in all sectors to help them identify possible threats and weaknesses and devise strategies to deal with them.

We have had many years of growth and a benign economic environment, so it’s important that management embraces a whole new way of looking at things, at their own businesses and those of others.

Much is obvious: careful monitoring of cash flow, keeping a close eye on customers and key suppliers for signs they are having problems and how exposed you might be if those problems turn really serious.

But it’s important to look carefully at the less obvious, at the problems that could take you by surprise.

For example, now might be a good time to think about the different rules applying to property. Here the law gives landlord remedies that are not available to other businesses, giving him, for instance, power of distraint over a tenant’s goods in the event of unpaid rent. This could affect you, if your stock is on the premises of a customer, a supplier or a third party warehousing facility. If they are having problems and don’t pay their rent, then the landlord could seize your stock, leaving you with a headache, unless you had a retention of title clause written into any contract.

Also, in a recession a business may need advice on a redundancy programme or on moving towards subcontract labour and it’s important to get redundancy processes right and avoid any expensive tribunals.

However, an economic downturn does not just mean threats. There are also opportunities and you have to be equally prepared to take advantage of these.

Any company on the acquisition trail could find some real bargains, whether through buying a business from administration when you don’t have to buy goodwill, or before it goes into formal administration, so avoiding an auction.

Clearly, to take advantage of such opportunities, you need to have done your homework and ensured you have the funds in place. Talk to us at the earliest opportunity to get some sense of what you can afford and what finance might be available. There are investment funds to support the right businesses doing the right deals and we have the right contacts to access them.

At Muckle LLP we can provide advice on these and other issues. If you are worried about the state of your business we are happy to have a chat and maybe refer you to specialists among our extensive network of contacts, including accountants, investors, bankers and others.

Our extensive experience has led to many awards; including Corporate law Firm of the Year at September's Insider Dealmakers Awards 2008.

:: If you would like to talk to some or all of Muckle LLP’s team of experts, call Matt Collen on (0191) 211-7982