Redirect a Failing Business
During economically challenging times there are more and more businesses that find themselves in that difficult situation where sales are falling, costs are rising and the creditors are nervous. Before a business owner closes the door, it is worthwhile considering a turnaround approach.
Redirecting a failing business takes a specialized and systematic approach. There are many factors involved, but a few key pointers are as follows:
An honest and thorough analysis
A turnaround manager will take a detailed look at all aspects of the business and come up with an honest appraisal of the enterprise and its chances for survival. This initial review should look at all aspects of the operation including sales, finance, administration, staffing and overheads. Suppliers should also be reviewed to determine if they are giving you the best trading terms.
Can the business survive in its present form?
Often a company has been overspending. It has too few sales to support the overheads. An experienced turnaround manager will be able to tell you what the business can afford and will point to areas where cuts can be made and efficiencies introduced to create a more sustainable business.
Speed is of the essence
A failing company is losing money and the longer it goes on the more it will owe to creditors and the bank. By acting quickly you will stem the losses and allow yourself some breathing room to try to pay off debts and build cash reserves.
A credible financial plan
If creditors, the bank and employees are going to support a business, they must see a clear and achievable plan for future success. This can be very concise, but must show how and when debts will be paid and it needs the buy-in of creditors.
Communicate a clear strategy for the future
A fundamental analysis of the causes of the problems will reveal where the company has gone wrong in the past and a new strategy should avoid previous mistakes and follow a new direction that is clear and robust in a competitive world. In fact, go back and review what your competition is doing well and not so well.
Make sure you have the right people with the right skills in the right jobs and get them on board with the new direction. Despite tough times, it is crucial that everyone who works in the company buy-in to the future plan and is positive about its potential for success.
If you need further advice or support, give us a call at FreshXperts LLC.