Overview
A series of difficult situations lead to the director of this Harley Street health centre wanting to close the doors for good.
On top of mounting toxic debt, insufficient revenue and creditor pressure, the practice had been forced to relocate due to changes with their prior premises. The move they made was to a building which was too large for their needs and, as a result, became a financial drain.
Whilst special payment arrangements had been made with the bank and the HMRC to buy time to repay the debt, creditors were verging on recovery action and the director saw no other option but to cut losses and dissolve the business.
About the company
Established in 2008, the health centre is a small business employing 8 members of staff. At the time the director contacted us for advice, the business was turning over £2.2 million.
The challenge
It was clear this business had severe cash flow problems. Not only did the health centre have an outstanding debt of £1.6 million, but it also wasn’t seeing enough clients to generate sufficient revenue.
The situation worsened when the director received an eviction notice. The landlord of the premises the business occupied wanted to modify the building for a change of use which meant the health centre was no longer a suitable tenant.
The move resulted in the lease of a four-story building of which the health centre only occupied one of the floors. The operating cost implications of this triggered more borrowing and soon the business was threatened with recovery action from creditors.
“The business wasn’t generating sufficient revenue to service its operating costs.”
– Rick, Case Manager
How we helped
With personal guarantees across most of the accumulated debt, it was easy to see why the director had resorted to the idea of dissolving the business. But, with our advice and guidance, it soon became apparent that recovery was possible.
By establishing support from the creditors on behalf of the client and helping to sublet the other floors of the premises, the health centre had potential once again.
We then worked with the director to look at further stabilising the business with improved planning, marketing and business analysis.
The result
The health centre is now starting to benefit from increased business and has an improved turnover of £5.3 million with £1.8 million net profit.
We will continue to work with the director on strengthening the foundations of his business even further, with a view to packaging the business to sell.
“We are still working closely with the director and business is growing from strength to strength.”
– Rick, Case Manager
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