TRADE & RETAIL INSOLVENCY SUPPORT

Navigating financial difficulties and insolvency in the retail and trade sector presents unique challenges. In order to accurately manoeuvre this complex process, specialised expertise and a deep understanding of the unique challenges these industries face is required to pave the way to a viable future.

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Supporting Retailers in Trouble

In the ever-evolving hustle-and-bustle of trade and retail environments, businesses are faced with numerous pressures. These range from fluctuating consumer demands to intense competition, as well as constantly shifting market trends that require you to stay on your toes at all times. Inquesta is here to provide expert guidance and support if things have taken a turn for the worse.

Our team of insolvency specialists are experienced at helping businesses to root out the primary causes of financial distress, and develop detailed strategies to mitigate such issues. Whether you’re looking to stabilise your business, navigate complex insolvency procedures, or explore your potential recovery options, our experts bring a wealth of experience to guide you through.

We also understand that sometimes, despite best efforts, financial recovery may not be possible. It might even be out of your hands. In such cases, we offer comprehensive trade and retail insolvency management, ensuring you are aware of the best options available to you and are totally compliant with all legal requirements. If retail liquidation does become necessary, we are here to ensure you understand every step of the process, as well as their potential implications.

Download our FREE Guide to Liquidation

While a partnership voluntary arrangement does offer a lifeline for struggling partnerships, it’s by no means guaranteed to succeed in every case. If the partnership is unable to meet the terms of repayment, or it becomes clear that recovery is no longer viable, the next steps may be to consider closure, including liquidation options.

Liquidation involves winding down the business and distributing assets to satisfy creditors. It’s a complex process, with various legal and financial implications — understanding this is key. For a comprehensive guide on what liquidation entails, download our dedicated Liquidation guide to learn more.

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Main Causes of Retail Insolvencies

Trade and retail companies encounter a variety of different financial challenges. Our team of insolvency specialists are on hand to help you if you’re dealing with any of these issues:

Economic Downturns

Retail insolvency is often precipitated by economic downturns, including recessions and periods of inflation. During these tough times, consumer spending will typically decline as people look to tighten their budgets and prioritise only the most essential expenses. This reduction in customer spending habits then directly impacts retail sales and, in turn, profit margins.

Additionally, inflation during economic downturns only further exacerbates these issues by increasing the cost to purchase the goods and services in the first place, which leaves businesses with two choices — keep prices the same and reduce margins further, or increase prices and potentially see customers go elsewhere in search for bargains.

Changes to Consumer Behaviour

Significant shifts in consumer behaviour is also a large driver for retail insolvencies. For example, the rise of online shopping in the 21st Century has seen retailers faced with significant challenges. Additionally, rapidly shifting consumer preferences mean that many retailers must continuously adapt their service and their stock in order to stay ahead of the curve in the market. Failure to stay flexible in this manner can lead to a lost market share and weaken the financial health of the retailer — potentially plunging a firm’s future into uncertainty.

High Operational Costs

A firm’s operational costs can also be a contributing factor in retail insolvency. The reason for this is that trade and retail firms often are hit with significant fixed costs such as rent, utilities, and labour. These costs, all of which have the potential to rise, can put serious strain on resources, particularly during a period of poor or underperforming sales.

Rising wages and benefits further increase operational expenses, making it challenging for retailers to sustain profitability. When operational costs outstrip revenue, retailers can quickly find themselves in financial distress, potentially leading to insolvency.

Inadequate Management

Poor management can be a significant contributor to retail insolvencies. Ineffective strategic decisions can prevent a business from being able to effectively respond to changes in the market. This makes it harder to batten down the hatches if times are tough, as well as capitalise on opportunities.

One of the worst examples of poor management decisions leading a business towards insolvency is when inventory management is lax. When you under or overstock products in a business setting, it can create financial strain, cause instability, and eventually lead to the company becoming insolvent if the issue is not addressed.

Additionally, if upper management are not able to properly manage company finances, leading to high debt and poor cash flow management, retail insolvency will always be a realistic threat. Excessive debt makes businesses unsustainable, particularly when revenue declines.

Aggressive Competition

Retail is one of the most competitive sectors out there. With over 300,000 companies in the retail sectors alone in the UK, the competition to sway consumer attention can be fierce. Additionally, market saturation can erode profit margins and make it more difficult for retailers to maintain profitability. And with the convenience of online shopping, large-scale international businesses may even be able to disrupt local UK-based companies’ trade and intensify pressures.

A retailer that is unable to properly differentiate themselves may struggle to survive in the long run.

Supply Chain Issues

A major disruption to a supply chain can have a significant knock-on effect on a retailers’ operations and, over time if the issue persists, its financial stability. There are a variety of reasons a supply chain can face significant delays and disruption, including natural disasters, serious sickness, death, geopolitical issues, and much more. This level of supply issue can hamstring a company, resulting in delays, shortages, and increased costs.

Retailers with a limited chain, heavily dependent on a small number of suppliers, are often particularly vulnerable to such disruptions — placing strain on finances and, if not effectively managed, potentially contributing to insolvency.

Macroeconomic Factors

Part of the stress of running a retail business, particularly for those who deal in international shipping, is that sometimes you’re beholden to factors outside of your control — such as currency fluctuation, trade policies, the influx of new laws, etc. Macroeconomic issues such as these can seriously strain financial resources and ultimately leave owners scrambling for solutions to avoid insolvency.

Inquesta for Specialist Retail Insolvency Support

Facing insolvency in the trade or retail sector? Inquesta’s expert team is equipped to assess your financial situation and develop effective solutions. We work with you to address financial crises, providing the best possible chance for recovery and long-term growth. Our client-centric approach ensures you receive a personalised, high-quality service.

Our primary objectives when providing trade and retail insolvency support is to educate you, and provide some much-needed stability for your business, wherever possible. Inquesta is dedicated to protecting business owners from managing potential financial repercussions that can arise — assisting with managing personal guarantees, creditor negotiations, and exploring personal insolvency options if necessary, including bankruptcy.

Our expert team has the experience to offer the guidance needed to navigate the highly complex and nuanced retail insolvency process with both confidence and care.

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Our Specialist Team

The team at Inquesta has the experience and expertise necessary to offer you the trade and retail insolvency support you need.

Steven Wiseglass

Director of Insolvency

A co-founder of Inquesta, Steven is a licensed Insolvency Practitioner with over a decade of experience in the field. He is a member of the Insolvency Practitioners Association, Association of Business Recovery Professionals (R3), and his insolvency licence is issued by the Insolvency Practitioners Association. In addition, he sits on the R3 committee of the North West Regional Committee.

Steven specialises in advising directors of small to medium-sized businesses, and has a wealth of expertise in providing the most appropriate advice whatever the firm’s circumstances may be. He has also been instrumental in helping company directors save their business and rebuild them into successful enterprises.

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FAQs

What Does it Mean When a Retailer Goes Into Administration?

When a retail business enters administration, it means that the company is insolvent and unable to pay its debts, An appointed administrator takes control to assess best options, including restructuring, selling all of or parts of the business, or liquidating assets, with the primary goal of maximising creditor returns while protecting the firm from immediate legal action.

What Happens if a Company Goes Into Insolvency?

When a retail company goes into insolvency, it means that it cannot pay its debts. At this stage, an insolvency practitioner will generally be appointed. Their role in a retail insolvency, or for another industry, is to liquidate the business by selling off assets and settling debts however they can manage and to the best of their abilities.