As insolvency experts brace for an onslaught of business failures in the next quarter, they are urging directors to come forward with their problems before it's too late.
Says Kerryn Downey, managing partner at corporate advisory firm McGrathNicol, one of three appointed receivers of Feltex: "The 'ostrich mentality' of New
Zealand businesses is dangerous. People should never be afraid to call for help."
Mark Lowndes and Mike Whale, partners of corporate law firm Lowndes Associates, agree too many companies narrow their options by leaving it too late to get professional advice.
"Business owners are inherently optimistic, they are waiting for the next deal," says Lowndes.
Simon Shreeve, a New Zealand-based English entrepreneur, remains optimistic despite having experienced business failure first-hand, saying he has come to see it as "part of the entrepreneurial journey".
Shreeve at one stage had three young businesses operating simultaneously, something he wouldn't recommend. Two events businesses, XLR8 Events and XLR8 NZ, are in the last stages of voluntary liquidation.
The businesses were not victims of the recession - the main problem was a director-shareholder dispute that was beyond resolution, Shreeve says.
"There is a lot of public stigma around business failure, but I did not go out in business to try and get into this position."
Shreeve's creditors will get a percentage of the money they are owed, he says. He is working with some of these people in his other business, but has had no contact with others since the liquidation.
"The biggest lesson I've come out with is to work out your exit strategy at the beginning. We were stuck; this was the only pathway out."
Shreeve has also realised the value of getting good advice early on. He and wife Anthea now run a business called Homebase, doing home staging, furniture hire and corporate relocation. He has appointed Grant Thornton as his business adviser. The advising partner, Eugene Sparrow, can "see the wood for the trees", Shreeve says.
"When you are a director and working in the business, you can get caught up with things and be too operational."
