Is Your Business In Trouble? What Can You Do About It?
Not every troubled business can be saved, but it’s fair to say that the earlier experts are called in, the better. Procrastination about obtaining help usually means a solution will be forced on you.
From the business owner’s perspective, if a restructure is underway there are three main things you should be doing while the turnaround experts are implementing their plans.
Be positive – you now have the assistance of somebody who has done it before, who can cast a fresh eye over your business and its systems.
Survival is the main game – don’t make promises you may not be able to keep. This will help you to rebuild the trust of stakeholders.
Thirdly, you still make the decisions – so question the advice you receive and if it is sound, implement it.
Watch, listen and learn, and you will be on a faster path to a sound business model with increasing profits.
From the turnaround specialist’s perspective, these are some of the things we look for to help us decide if we can restructure and save the business:
Key elements for a successful restructure
If the majority of responses to the following questions are not positive, the harsh reality is that a turnaround is not likely to succeed:
Management must be capable of lifting their performance. We ask questions such as:
- are reliable management information systems in place?
- are there credible reasons for management getting into trouble?
- will the current management be flexible – can they change and are they capable of being trained to guard against returning to bad habits?
Basically, we and the stakeholders need to know what will be different going forward so the business is not back in the same space in six months’ time.
Will sufficient cashflow be generated to meet payment plans and are we able to source internal funding? Is the core business profitable or can it be made profitable? We need to know if the problems are a short term blip in the company’s trading history or the start of a long term trend.
Do we understand the agenda and comfort levels of secured stakeholders? Can we rebuild the trust and confidence of all stakeholders? Will suppliers’ credit terms and limits be maintained? What do the customers think?
If the answer to most of those questions is yes, your business stands a chance. Next time, in part 3 of this series, I’ll step you through how a turnaround practitioner tries to help get troubled businesses back on track.
Vantage Performance is a leader in sustainable business improvement, winning national recognition in 2008, 2009, 2010, 2011 and 2012.