The start of the year has seen the insolvencies of large businesses such as Darrell Lea, Pie Face, Forge Group and Radio Shack, taking over the news. But here are the brutal statistics: management failure is the main cause of corporate insolvency in Australia, and 82% of the casualties are small businesses with 20 or less employees.

Corporate insolvency does not only affect the entity company; it can also cause personal hardship and emotional pain, as well as affecting one’s family and home-life. Many Australian business owners work long hours with little reward, and so feel the effects of their company’s downfall very keenly.

Positive thinking is an important attribute for managers to have; the ability to see the outcome and achieve it is crucial to keeping your head above water. In saying this, however, it is important to set realistic goals that you can achieve and not to make unrealistic claims to stakeholders. Good financial management is crucial to avoiding corporate insolvency.

It is a trend that many struggling companies also lack the necessary preparation to survive in the corporate world. When running a business, the fundamental point is the business plan, and the most important ingredient is the budget. An updated and accurate budget is essential to maintain in order to avoid corporate insolvency.

Setting priorities is crucial to avoiding corporate insolvency, but many business managers fail to differentiate between what is important and what is not. Perception is also crucial and often overlooked – businesses should not blindly rely on the standard textbook management style. Understanding how your stakeholders perceive your business can provide a good indication of your future success.

Performance is the final aspect, which leads to many corporate insolvencies. It is up to management to make things happen, and if that does not occur then your business is in dire need of restructuring.If reading this article about corporate insolvency has got you questioning the long-term viability of your business, call us today at Australian Company Liquidations on 1800 731 155.

Call now on 1800 731 155. We operate a 24 hour / 7 days a week company liquidation hotline.