• Insolvencies are likely to fade away during the summer sun but a rash is expected in October
• SME’s factor eight checklist to protect against post summer blues

An estimated 3000 businesses will fail in October following the post-holiday period, according to Tenon Recovery, showing an increase of 43% on the same time last year.

The turnaround, restructuring and insolvency specialists have identified entrepreneurs allowing problems to escalate over the holiday period as the main reason for this post-summer surge in insolvencies.

Sectors most at risk are property development, retail, leisure, printing and manufacturing.

Carl Jackson, National Head of Tenon Recovery, said:

“Owners neglecting key issues combined with the difficult economic climate could send the number of business failures spiralling to unprecedented levels this autumn.

“Entrepreneurs who fail to deal with crucial business issues before they go on holiday could return to a nasty surprise.  Ignored, these issues can escalate posing a serious threat to the viability of that business.”

Tenon’s factor eight checklist addresses key issues that entrepreneurs are likely to face during the summer months and highlights actions that could be taken to minimise any threats to the business.

SME’s factor eight checklist:

1. Forecasting is vital
   Confirm that there will be no unexpected cashflow peaks that will not be covered by bank or ABL facilities during the holiday period.  Ensure that there is sufficient contingency headroom to avoid any significant problems.
2. Authorise key payments in advance
   Ensure that any key payments that will need to be made during the holiday period are authorised prior to departure to retain the goodwill of creditors.
3. Liaise with debtors to improve cashflow
   Improve cashflow by informing any large or key customers of planned holidays and negotiate early settlement of large invoices.
4. Speak to key stakeholders
   Make key stakeholders – creditors, bank managers, advisors – aware of any absence so that negotiations and decisions can be postponed.
5. Review continuity planning
   Ensure that appropriate staffing levels are in place and those in charge are empowered to run the business effectively for a protracted period in the event of unforeseen circumstances.
6. Consider recent events
   Review recent performance and business actions to assess whether a holiday (a) is realistic at the present time and will not have a negative impact on the business; (b) will not be considered inappropriate by employees, customers and suppliers in light of poor business performance
7. Check all contact details
   Provide emergency contact details to key staff; agree best times and means of communicating to keep in touch with any important issues that may need to be addressed.
8. Clear the diary
   Clear time before and after a holiday in order to address any potential problems and catch-up on business performance.

Carl Jackson added:

“The next few months may well define how long the downturn will last.  There are some 4.5 million SMEs in the UK, making up a significant proportion of the UK economy – a considerable increase in the number of small business insolvencies would be hugely detrimental and could prolong what has already been a very painful recession.

“By developing a pre-holiday checklist, we hope to impress on entrepreneurs the need to plan – a proactive approach is vital in this climate.  It could be the difference between survival and collapse.”

About Tenon Recovery
Tenon Recovery is the second largest corporate appointment taker in the UK.  Specialising in turnaround, recovery, restructuring and insolvency in both the corporate and personal sectors, Tenon Recovery is led by 43 directors supported by 350 staff operating from a network of 30 offices across the UK.  Tenon Recovery has strong relationships with secured lenders, both banks and asset-based lenders.  Tenon Debt Solutions assists over 3,000 individuals suffering from sever debt problems – see www.tenondebtsolutions.co.uk