Company Turnaround

Sometimes businesses find themselves in difficult situations through no fault of their own.

A previously healthy market has suddenly declined, a well financed competitor is price cutting, a key member of staff falls ill or you have got so busy that your business process has buckled and your cash has been consumed by upfront cost of sales.

Honest Appraisal

What a business owner wants in times of difficulty is the honest truth. Hard facts. They do not want their senior sales person telling them that actually everything is rosy and that they are this close to a big order that will turn round your company’s fortunes when it plainly isn’t true. (probably this mis-information that got you into trouble in the first place).

The review should look at all departments, costs and staffing levels. If you have time then process map the business to calculate the minimum number of people it would take to continue delivery of your product or service.

New Business Model

Based on the findings of the appraisal draw up a new financial business model. Based on current order book, realistic future order prospects and with the new cost structure that includes revised staff numbers. This new financial forecast will help you create a detailed cash flow diary. An important tool in micro managing your cash. This financial forecast will also be important when you’re talking to the Bank and key suppliers, so don’t over egg it. One sniff of bull manure and your whole credibility disappears.

Implement Changes

Speed is of the essence when you are haemorrhaging cash. Take into account the consultancy periods required when making redundancies.

Creditors

Contact all key suppliers and explain your situation. Be as honest as possible and you maybe surprised at how amenable suppliers can be. Offer them a realistic payment plan. And if you can pay them a small amount today then do it.

Meet with the Bank and explain the situation and ask them for their support. Be aware that if the Bank doesn’t believe in your new business model then they might work against you. So proceed with caution.

Future Vision

It’s imperative that all senior management that are involved in the new structure believe in it. Positivity breeds success. If anyone at this late stage still doesn’t believe in the new vision then kindly escort them from the bus. They will spread their negativity to whoever will listen.

Having no money to pay the salaries and making long term loyal staff redundant is very stressful. Remember stay calm and think clearly.