How to turn around your business

A business that is in financial difficulty broadly has three options: to sell the business to someone who believes they can fix it, dissolve the business, or turn it around.

Business turnaround involves the reversal of a business’ decline and the restoration of its stability with the desired result being an increase in value and viability. Although it can often seem like a business that has serious debt problems cannot be saved, with the right advice business turnaround could still be realistic option.

There are a few conditions that need to be met before turnaround becomes an option:

• The core business still needs to be viable. The business needs to show that it can be made profitable and can grow in the longer term.
• There needs to be adequate time and money available? If the process is considered too late, it may no longer be a realistic option as the business may have passed the point of no return. Funding is also important, as cash buys time, which in turn helps with the overall regrowth of the business. Funding can be generated from normal business trade, the selling of nonessential assets or even through refinancing from third parties.
• The businesses stakeholders must support the process. This is essential to ensure that the business is recognised as making a proactive attempt at turnaround, which can calm creditors and buy more time for the process to have an effect.

It is then important to appoint an experienced Turnaround Practitioner who can bring critical skills to the overall process and take the lead on the entire turnaround process. They will communicate with banks and other creditors on behalf of the business and help demonstrate to them that the business is taking steps to improve and repay.

There are three broad phrases that can be used to outline the main stages in a turnaround process. The initial stage involves solving the immediate financial strains on the business, such as cutting costs on nonessential practices or even cutting staff members who are not as critical for the core business functions. After this first stage, the business enters a period of stabilisation which allows the longer term plans of regrowth and management to be planned together with getting the finances ready to do so. The final stage is to put the plan into practice together with the Turnaround Practitioner and begin turning the business around.

If you are looking for more information on how to appoint a turnaround practitioner, why not talk to us on 0845 468 2395 or visit our contact page.

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