Why you should avoid the unregulated business recovery wild west

Small businesses may have been pegged as the ‘backbone’ of the British economy, but becoming an established SME is no easy feat. The latest statistics from commercial insurer RSA reveal just how treacherous the path is, reporting that more than half of new businesses don’t survive beyond the five-year mark.

In desperate times, it’s all too easy to resort to desperate measures. And for some entrepreneurs, this means falling for solutions that are fast, easy and effective. Or so it seems. Unfortunately, what most entrepreneurs don’t understand is that ultimately, these business recovery ‘cowboys’ only make problems worse. In these situations, the old mantra is true, “if it seems too good to be true, then it probably is”.

The rise of ‘cowboys’ in shining armour

Over the past few years the industry has been hit with an influx of ‘ambulance chasers’ and unregulated organisations. To the point that it’s prompted R3, The Association of Business Recovery Professionals to publish an official guidance document outlining the risks of unregulated advisers.

For business owners, the document highlights common examples of misleading information provided by unregulated advisers. It explains where their arguments fall short, what consequences could arise from taking ‘cowboy’ advice, and how to approach insolvency situations in a way that’s regulated, and risk free.

From marketing letters to cold calls to, unlicensed organisations source troubled businesses via a host of avenues. Backed with big promises and plenty of appeal, they cast spells that put entrepreneurs under an illusion of false hope.

So what are the risks of enlisting the help of an unregulated advisor?

For starters, the risk of taking the wrong action to resolve your business’s financial issues is very real. Flirting with cowboy providers is incredibly dangerous from a personal perspective. Why? Because directors of limited companies can be held personally liable for a company’s debts if it continues trading after business failure is inevitable. This could leave you open to prosecution, as well as damage your personal finances.

There can also be a knock on effect to third parties, wherein business owners are given incorrect information regarding the responsibilities and duties they have towards others. Unregulated business recovery providers often have a shaky understanding of the law, which means you could receive misleading advice regarding the legal responsibilities you have towards your business. 

Ultimately, guidance from an unregulated advisor could see your business fall deeper into financial turmoil. Failure to take responsibilities seriously can result in persons being permanently struck off from acting as directors. This means that the wrong advice can damage not only your existing company, but also your future prospects as an entrepreneur.

If my business is struggling where should I turn for help?

Ultimately, business recovery services exist to help entrepreneurs convalesce operations, regain financial control and reclaim success. Yet ironically, cowboy providers only serve to make situations worse, and plunge businesses into irreversible voids. So, if your business is in serious trouble and you’re equally as serious about getting out alive, avoid the unregulated business recover wild west at all cost and enlist the help of trusted qualified professionals instead.

If you are considering insolvency, then Kingsland Business Recovery can help you weigh up the options that are available. To discuss further please feel free to contact one of our directors on 0800 955 3595 for a no obligation, confidential chat. Or alternatively, drop us an email at info@kingslandbr.co.uk.

Latest News

Keep up to date with the Insolvency industry:

Experienced in all areas of corporate and personal insolvency

Combined experience of over 30 years in all areas of corporate and personal insolvency. Read more...