The Consequences of Small Decisions

There are reports that EU Commission proposals to remove the obligation for small companies to file annual accounts at Companies House could restrict small firms’ access to credit, as removing annual accounts filing would make it difficult for banks and credit insurers to assess the viability of Companies.

However small firms are already not helping matters as many of them currently file abbreviated accounts at Companies House. This already affects these Companies access to finance. If these businesses were to file their full accounts, they may find that more and more lenders would be willing to lend greater amounts to them.

Why am I telling you this? It is because business owners often make small decisions without thinking about the consequences of these decisions.

The decision to try to hide information from anyone external to their business may actually hurt their own business and mean that they cannot obtain the funding that would make their business more profitable and increase its value. This simple decision may even lead to liquidation or receivership.

Business owners should always have one eye on their exit strategy, and consider what impact any decision may have on their businesses value and saleability.

Perhaps the first decision should be to file full accounts with Companies House from now.

Directors should not be so naïve to think that a prospective buyer would not obtain a credit report and use that information as part of their due diligence, and ultimately as part of their own assessment as to the businesses value.

This entry was posted on 20/03/2009 at 10:01 am and is filed under Selling Your Business, General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.