Will Davies – the co-founder of burgeoning property maintenance concern aspect.co.uk – said: “I’m afraid that a tough financial climate will always result in a high number of bankruptcies but many of these firms are potentially very good businesses.”
“They just need to be run in the right way to ensure that they generate profits, manage their cash flow and receive the correct level of funding to keep them afloat through rough times,” said Mr Davies – who was an investment banker before founding aspect.co.uk
Davies bought his own company out of a Company Voluntary Arrangement, financed the deal himself because the banks weren’t interested in providing capital and the company now turns over more than £10 million a year.
He cherry-picked some of the defunct company assets (including leased vehicles, ladders and drainage equipment), the goodwill in the trading name and the debtor book and took on most of the staff.
Mr Davies said that he was able to recover very nearly £50,000 for the debtor book and managed to pay back the loans he needed to buy the business within three months.
He had previously worked in the small mergers and acquisitions team at SG Hambros. His specialism at the bank had been buying and selling small businesses and now he was experiencing it for himself!
The business was overhauled to make it more cash flow efficient and the operational staff were paid when the company was paid itself.
“The alternative is that you take on a fixed rate engineer, pay him from 8am-5pm and he sits there with a bacon butty wondering how to pass the time. You need to try and make what money you can out of him and incentivise him want to work and earn,” said Will Davies.
