Why are businesses which are falling short of the mark allowed to continue to operate – to the detriment of smaller businesses?
This has been on my mind for a while, and I am still annoyed that the Irish government has done little to protect small businesses in Ireland. At the very least, the British government have put in place a prompt payment scheme to help ease cash flow problems for small businesses during the economic slowdown.
With so many bigger businesses closing or nearing closure, not enough is being done to ensure that small businesses are receiving payments for goods or services provided to businesses nearing financial crisis.
A perfect example of this is the closure of Renard's, the infamous Dublin nightclub owned by Dublin businessman Robbie Fox. Renard’s is the epitome of the rise and subsequent fall of the celtic tiger. The club was a regular watering hole for many of Dublin’s rich and famous. However, after the business along with its three sister businesses starting losing money heavily in the latter half of last year the owner of all four businesses – Robbie Fox finally called in the creditors at the start of June to announce their closure, a year after the businesses started going downhill.
The four businesses leave a staggering £6.6 million in debt owed to Mr Fox as well as the Revenue Commissioners and a host of small business service providers. The announcement is yet another blow for small businesses across the Republic and will have a knock on effect with those businesses now struggling to keep paying bills to their creditors.
The reckless attitude of larger businesses which are attempting to stay in business despite the odds is exemplified by Mr Fox’s comment that “maybe I should have closed Brown’s Barn earlier, but my attitude was that it was worth keeping open so long as the leasehold value was greater than what I owed” . With property value falling rapidly, it is hard to understand how Mr Fox was calculating the worth of the leasehold which, liquidator Gerry Murray reckons he will not be able to secure anything near the €150,000 value assigned to the leasehold. Hardly worth keeping open then and especially not for small business owners who are now “a couple of grand down” each and some maybe now facing closure themselves.
The failure of the Irish government to develop a prompt payment scheme similar to the UK indicates their continuing inability to protect small business owners. Maybe in a year's time Brian Cowen and Brian Lenihan may wake up and realise that something needs to be done.