When your business begins to experience difficulties the key to a successful turnaround is the ability to address and identify the operational and financial issues as early as possible. The more distressed a situation becomes, the fewer options you have to address the underlying problems.
With experience in working with companies under financial pressure we will work with you to identify the causes of the financial difficulties and ensure your strategy is developed and implemented in order to achieve your desired outcome and a successful.
Early signs generally include lower margins, working capital deterioration, ineffectual marketing, large projects failing to meet their goals and low staff morale. Over time this will place a strain on the business’s relationship with suppliers, customers and stakeholders.
What is the short term strategy in order to give your business time to restructure? Have you distinguished between the causes and symptoms of declining performance? The answers will depend on industry competition, market forces and the life cycle of the company.
The turnaround process generally begins with assessing the business’s immediate needs. Does the business have sufficient liquidity to provide time to assess the operational and financial alternatives? A business should proactively engage stakeholders to provide confidence that their concerns will be addressed.
Consider the medium to long term direction of the business. While the business’s capital structure should reflect the business model, we must also consider the dynamics of the marketplace when preparing a revised business plan and financial forecasts.
While an exit strategy may be considered, businesses sold as a successful going concern generally realise greater value. Part sale of the business to a minority shareholder may also be considered to bring added expertise and direction. Regardless of which direction is chosen, the ultimate decision should be consistent with the owner’s long term goals.