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Article

Thomas Cook’s collapse - the impact for owner managed businesses

Article

Thomas Cook’s collapse - the impact for owner managed businesses

18 Oct 2019

2 minute read

When multinational companies fail, inevitably the headlines are numerous as the devastating consequences for employees are recognised. However, there is another group of stakeholders who will also suffer, their trade creditors.

Thomas Cook’s collapse - the impact for owner managed businesses - news article image

When multinational companies fail, inevitably the headlines are numerous as the devastating consequences for employees are recognised. However, there is another group of stakeholders who will also suffer, their trade creditors.

Whilst it is probably assumed that the large companies such as Thomas Cook don’t trade with smaller owner-managed business directly, the supply chain further down the line may well include small and medium sized enterprises, and they will inevitably feel the knock-on effect, just as they did when large retailers and facilities companies like Carillion failed.

Those businesses who are selling to the wider airline and travel industry will already be looking at the stability of their customer base and their order book but there are lessons to be learnt here for all businesses.

Here are five key steps all businesses should be taking to review the impact large insolvencies could potentially have on their own trade:
1. Understand which sectors and which particular companies your business is ultimately reliant on. Keep up-to-date with industry reports, company financials and predictions for future trading
2. Diversify your customer base into different sectors so you are less reliant on one
3. For those companies (either your direct customers or their customers) where you identify that cashflow or profitability may become an issue, take action to review your own trading terms with them and ensure your credit control is organised and thorough
4. Review your own cashflow requirements, planning ahead with projections and ensure you have the correct facilities for your business’ financing needs, both working capital and growth finance
5. Look at your own sector’s ‘growth curve’ and consider when the ideal time would be to achieve an exit, so that you obtain the highest multiple and the most interest from any purchasers
As economic conditions, lifestyle or generational preferences and technological advances change on a daily basis, sectors and the businesses within them have to look up to recognise what is happening, and evolve. If they don’t manage to do that in a timely way, there can be disastrous consequences. All business owners should look at their own company and those other sectors which they are reliant on, and take steps to avert future ‘big-name’ collapses affecting their company’s stability.

How Shaw Gibbs can help


Shaw Gibbs are a top 100 accountancy practice who specialise in advising owner managed businesses and private individuals in the Thames Valley, The Chilterns and London.
We have a large experienced insolvency team who are in a position to help in all situations that involve or touch on insolvency or corporate recovery.
We also have the back up of our accountancy and business advisory practice to help advise business on a whole host of matters including; tax planning, accounts and audit, corporate finance, and financial planning.

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Need expert advice?

Speak to an expert for advice on
+44-1865 292200 or get in touch online to find out how Shaw Gibbs can help you

Email
info@shawgibbs.com

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