Helping with your well-being - advice for insolvent entrepreneurs

The freedom of being your own boss and making your own choices is what drives many people to set up their own businesses and become entrepreneurs.  These individuals are the backbone of the British economy and are the evolution of our nation of shopkeepers.

Entrepreneurs are by their very nature optimists, otherwise they wouldn’t have the confidence to set up their own businesses.

Despite the wondrous sense of fulfilment achieved from building something out of nothing, there is a large aspect of the role that if not dealt with properly can lead to long term mental health issues.  

Extremely long hours attending to your business, sometimes having to make difficult decisions on your own, spending considerable time concentrating on mundane administrative tasks, constantly trying to keep employees happy and dealing with financial issues are some of the typical issues that can bring a great deal of pressure, stress and, if not carefully managed, mental health issues.

It can be lonely at the top and there are some worrying statistics illustrating that large numbers of once-optimistic entrepreneurs suffer from depression and other related disorders.

If this is not managed carefully these disorders can start to affect business decision-making which in turn could further exacerbate the underlying problem.

This is worrying enough, however these issues can compound when your business starts to fail, whatever the reason.  Being an entrepreneur is hard and when your business faces insolvency this can seriously affect your mental health.

Generally, businesses do not fail overnight, particularly in recent years where zombie companies have often traded unprofitably for some time, diminishing their asset bases until they run out of cash and no one is prepared to lend to them anymore.

Entrepreneurs generally wish to avoid failure at all costs as the collapse of their business will invariably mean the redundancy of their entire work force and, commonly these days, the crystallisation of personal guarantees.  Business owners are not just faced with losing their job but losing everything they have worked so hard for.  The stress this can cause can be unbearable and this clouds the decision process, as do the inevitable conflicts that arise from trying to do what is best for the business as opposed to doing what is best for themselves.

This invariably leads to loneliness, conflict at home and paranoia which then leads to reluctance to seek help. It can be hard for business owners to accept that anyone can understand the unique problems that they are facing.

The world feels like it is closing in around you.

From experience, I often find that when a company finally enters a formal insolvency process, whilst it brings a huge amount of sadness, it also brings a wave of relief for the directors who have been fighting for survival for so long.  It is also very often the case that in a couple of years' time, rather than being an apocalyptic experience, many directors have successfully moved on, not lost everything and wished they had dealt with their problems sooner.

Hindsight is a wonderful thing.

It is, however, the period leading up to an insolvency process that can really affect the behaviour of an entrepreneur and test one’s metal.  With over twenty years in the restructuring business I have seen a wide array of behaviours from directors of insolvent business, some of which can be applauded and others that are scandalous.  The majority of the latter, in my experience, have not been devised by a criminal mind but are purely a reflection of the stresses inflicted upon ordinary people who are hopelessly overburdened and striving for self-preservation.  I am sure that a lot of them in later years have felt shame at their previous conduct. 

It is important that entrepreneurs seek professional advice early when their business is showing signs of distress rather than fighting on alone and suffering the mental health issues that invariably follow.

A problem shared is a problem halved and discussing the needs and concerns of your business early with the right insolvency practitioner will not, as some automatically think, mean that the business will fail quicker or that they will be bullied into entering a formal process.  Early assistance brings a range of options that will quickly determine whether the business is able to survive and if so, with careful planning these can be acted upon which will help ease the burden.

As a profession advising directors facing insolvency, there are so many issues that need to be dealt with quickly and so many stakeholders that are owed a duty of care, that sadly the mental well-being of the director caught in the middle of everything is not given enough consideration.  This reflects the law and our resulting duties rather than anything else.  Creditors don’t pay us to look after the directors: they are understandably focussed on the stresses of running their own businesses and in their minds the directors are to blame for them losing significant amounts of money.

Notwithstanding this, at Geoffrey Martin & Co we do care about this.  Our advice to struggling directors is clear and tries to take the emotion out of what they are facing, helping them to make the right decisions and get back on track as soon as possible.  We also take time to discuss any resulting personal implications from a company’s insolvency and ensure the director is aware of the ramifications of any decisions regarding the business, whether it be personal or assisting them after the event with issues of personal liability. We are also at hand 24/7 to deal with some of the more difficult issues that directors must face, such as employee redundancies, staff announcements and communications to key stakeholders.

As a firm, whilst we recognise that there is always more we can do in addressing the mental health concerns of our client’s directors, we are proud of the advice we give which is supported by the large number of personal recommendations we receive from those we have dealt with in the past.

Simply put, we’ll hold your hand through your nightmare.