How we can all help clients make the BIG decision!
The ‘big’ decisions business owners are sometimes required to make do not always come easy; and often agonise over those that must be taken. While it can be a positive decision like acquiring a new business/division, employing more staff, or investing in new plant/premises; mostly, it’s the defensive or negative decisions that business owners will stress over and/or delay the most. Human nature dictates that these types of decisions weigh heavily.
For those feeling the stress of running a business that is failing or amassing debts, they will feel a significant emotional, mental, and physical impact. This may manifest in many ways such as feeling ashamed, angry, in denial or in a state of fear.
Recognising that it’s for these reasons that business owners are not in their normal or positive state of mind is critical. Seeing or being able to articulate the solutions available to them is diminished and/or deciding to action one of them further compounds the challenge.
Every day we arrive at advisor/client meetings with an open mind and a hopeful heart that one of the many insolvency solutions will provide an appropriate outcome relative to the circumstances. And almost always, the business’s finances take a smaller proportion of the discussions, as we find ourselves taking on a quasi-counselling role; like many advisors do when their clients are in a vulnerable situation.
Mental anguish and stress about the business’s/individual’s future can cloud their judgement and confidence in making a decision, even if that decision will ultimately lead them to a better position.
When financial difficulty or insolvency slowly builds, the business owner’s mental health is usually compromised long before the debts are critically amassed. It will likely manifest in everyday business functions of managing cash flow, chasing debtors, and trying to forecast when and how that next project or client will convert. Unfortunately, this then impedes the ability to make the ‘big’ decisions—such as the business’s future.
These are important times for advisors to guide their clients through these big decisions. Many clients in difficult circumstances will feel isolated with their issues despite having a network of advisors or industry colleagues. They are also likely to feel deflated or ashamed with a sense of failure. Again, this is human nature.
Most advisors such as accountants, solicitors, and insolvency practitioners operate with an analytical mindset to effectively problem-solve and provide considered advice to assist decision-making. In most situations we see the options as being fairly black and white. However, we are deeply aware that when we are weighing up options, our emotions in the process will be vastly different to what the client is experiencing. While at times we feel frustrated at seeing a client delaying a straight-forward decision that continues to cause themselves anguish and stress, we know that the client is probably suffering from a lack of confidence or clarity to make the decision in that moment.
To assist, all parties involved should try to keep the lines of communication open, acknowledge the difficulties, and where possible promote the benefits of the decisions/ actions required.
We see the impact on the client (and sometimes the advisor) both before and after their decision is made. There is often a profound change in persona and outlook in the individual after the decision is made. There’s a genuine sense of relief—you can metaphorically see the weight lifted from the shoulders and the light in their eyes return. As professional advisors, we must be conscious of our clients’ mental health and the enormous mental stresses that people facing financial challenges can go through. As always, we’re here to help. Please connect with your local Worrells partner to find out how we can assist your clients.
April 2020: Understanding how chronic stress and business financial challenges affects people
August 2020: Key warning signs for a business in trouble
January 2020: Six client questions to uncover business distress