What BHS Can Teach Us About Insolvency

The insolvency of BHS and its failure to find a buyer capable of rescuing it has certainly captured the headlines as most insolvencies of large businesses do. The sad demise of BHS however is one that with the benefit of hindsight, everyone should have seen coming.

BHS has gone the same way as many other famous high street names in recent years as the struggle to remain relevant in a world undergoing an unprecedented technological revolution.

The life blood of any business however is cash flow and this was severely hit when the owners of BHS reportedly took millions of pounds out of the business that should have been reinvested. This is a mistake made by so many business owners who then find themselves in trouble when revenue declines.

The second mistake was to sell the company to an investor ill-qualified to rescue the company. One of the rules of business is to always invest in a business you can understand. BHS was sold to an individual who lacked the experience to turnaround a company at the sharp end of high street retail.

The third mistake was less about money and more about morality. The many staff members who invested their hard earned money into pensions will soon be finding out how much less they will have to retire on.

Perhaps the biggest thing to take from the fall of BHS is to always act early if you are serious about saving your business before it’s too late.