Financial trouble and business insolvency has a way of sneaking up on business owners, leaving them in desperate need of a business turnaround strategy. Even if you’ve gone to the effort of creating your own budgets and you believe you have financial systems in place, events can happen that quickly put your business on shaky ground.
You know you have cash flow issues when you constantly struggle to pay your staff, pay creditors and suppliers, and pay yourself the salary you need. Cash flow problems are not always your fault – sometimes your own clients (debtors) are late to pay you or become bad debts. These are good reasons to become concerned that your business is facing financial trouble.
Whether or not you’ve seen the signs far in advance or you’re suddenly now faced with a financial onslaught, there is a solution. Devising and implementing business turnaround strategies can save you from insolvency.
How to know if you need a business turnaround strategy
Signs that you may need to find a turnaround advisor can include:
- If your working capital growth outweighs revenue growth
- If you find your business facing tax and superannuation arrears
- If you find your business off its financial forecast targets
- If your cash flow is rapidly heading in the wrong direction
- Or if your business starts losing key customers
What is business turnaround?
Business turnaround starts by recognising the poor financial position you’re in and the need for a clear, proven strategy to recover, and get you back to positive cash flow and growth.
While this is not a simple and easy process, if you are able to pinpoint your business’ financial distress quickly enough, you may be able to implement strategies in time to avoid insolvency. This is where the need for an experienced business turnaround strategist is key – someone who knows what they’re talking about. Don’t close your eyes and hope it all goes away.
Perfect Timing
It’s often hard to ask for help. Whether it’s pride, fear, or rejection, many people try to avoid seeming vulnerable, and asking for help is often seen as a vulnerability. A business is something you invest so much time and energy into, it becomes a part of you. Opening up your books and revealing financial ‘failure’ can be very difficult to do.
However, for business turnaround to succeed, taking the step to ask for help is extremely important. Timely turnaround strategies could help your business avoid insolvency proceedings altogether. You have the chance to not only save your business, but also maintain the financial wellbeing of your staff and family.
Three components to turnaround strategies
There are three main components that a turnaround specialist will focus on when devising a strategy for your business. These three components are financial restructuring, operational restructuring, and stakeholder management.
Financial and operational restructuring are vital to the turnaround of a business. Current operations may need to be reviewed and optimised, reducing unnecessary time and money wastage, and boosting cash flow. In extreme cases, there may be an entire change needed in the way the business currently operates.
Changing operational components requires a great deal of trust. You need to have confidence that proposed changes will work, and your staff and other parties need to buy in. You’ll need a business turnaround specialist that has the right experience, and that you can trust with decisions like this.
Over and above financial and operational restructuring, stakeholder management is extremely vital in a business’ turnaround. From financiers, employees, and shareholders to creditors and customers, all stakeholders need to be included and informed of the turnaround strategies that will be pursued for a business.
Additionally, it is important to know that turnaround strategies are not quick fixes. At Allevi8HQ we offer you a 100-day Business Turnaround Plan that details the steps we aim to implement and the desired goals we hope to achieve from these plans. These plans boost performance and provide accountability, ensuring that the turnaround strategy is implemented in a timely and effective manner.
What are the stages in a turnaround process?
Typically the turnaround strategy you choose will be based on the type of business you have. Factors to consider include whether your business provides a service or a product, or if you have a small or large operation. There are five stages that are executed for every turnaround strategy.
- Analysing and assessing the business’s current financial situation. During this first step, your turnaround advisor will execute a detailed assessment and review of the business’ operations to understand how it ended up in the current financial situation. In this first stage, the major risks facing the business will be assessed, key issues will be identified, and mitigation strategies will be devised and communicated with stakeholders.
- Implementing and executing a business turnaround strategy to stabilise business operations. During this stage, the 100-day plan begins, plans to manage stakeholder and working capital engagement is enforced, and any items of the plan that can be conducted quickly are executed.
- Implementing management restructuring processes. From the removal of obsolete roles to a readjustment of personnel, either due to under performance or to allow key members of staff to focus on core business operations. A chief restructuring officer is appointed to assist and make sure that all plans are met and all milestones are achieved.
- Business restructuring. Whether it is through rebranding, entirely changing or adjusting the existing business model, or even selling off assets that are no longer viable to the core business operations, the chief restructuring officer will make the tough decisions that management often tries to avoid because they find it too hard to do themselves.
- The last stage is finally regaining control of your business in a financially healthier state. However, if it proves to be more beneficial to stakeholders for the business to be sold, that is the route that will be followed by the chief restructuring officer.
Making a business turnaround successful
To make a business turnaround succeed a lot of hard work and dedication is required from all business stakeholders as well as the turnaround strategist. A commitment to the long-term turnaround goals and a buy-in from all parties leads to increased turnaround success rates.
If a business can obtain funding and/or credit from suppliers, then the chances of turning a business around are higher.
Who can implement business turnaround strategies?
If your business is facing financial difficulty and possible insolvency then you need the assistance of business turnaround experts who have a proven record of returning businesses to profitability.
At Allevi8HQ, that’s what we do. Our team are experts at stepping in and immediately alleviating that financial and management pressure you’re facing. With our 100 day plan and proven strategies we can turn your business around, back toward strong profits and growth.
Contact us today and chat with one of our turnaround experts.
