It’s an unfortunate but undeniable reality that businesses in any industry can find themselves facing the kind of financial difficulties that threaten their very survival.
Even the most timely and appropriate actions might not be enough to save a failing business but the following action points can at least help tilt the odds more in your favour if your business is struggling to stay afloat.
1 – Take stock
Strategies that have taken your business to the brink of disaster should not be relentlessly pursued if they are very obviously not working. From a director’s point of view, therefore, it is vital to take a step back and take stock of the situation your business is in at a particular moment.
It might not be easy to take that step back but a broader perspective is what’s needed in these moments if a turnaround effort of any sort is to succeed. In short, when the future of a business is at stake, the leaders of the company need to make sure that they’re focussed on the issues that really matter.
2 – Understand your restructuring options
Whatever the particular dynamics might be within your business and the field you’re in, it is critical to understand the restructuring options available.
The process of turning around a failing business often relies on an effective restructuring plan that might represent big changes but which might just make the difference in terms of keeping your operation alive in some form.
3 – Raise cash any way you can
There tends to be nothing a struggling business needs more than access to cash and it is usually up to directors to free up funds in any way that’s possible. Typically this will mean finding assets that are not integral to the functioning of the business and which can be liquidated quickly to raise funds.
It can be difficult to accept that liquidations are necessary but, if you’re a company director, it is important to take these decisions for yourself before they are taken out of your hands.
4 – Trim your workforce and supplier list
In the context of a business potentially failing and ceasing to operate there will always be tough decisions that need to be made around personnel issues. No-one wants to be the bearer of bad news but in the interests of a company’s survival, it can be the case that valued employees have to be let go in order for financial commitments to be scaled back. Similarly, it could be that supplier relationships will have to be ended in order for outgoings to be limited to absolute essentials.
5 – Look at your alternative financing options
If you are in the position of managing a company in financial crisis then it is important to consider all funding options that might be available. There are an increasing array of funding solutions available to businesses of all sizes and it could be that your company has more choices and routes to finance than you’d imagined.
However bad your company’s finances might seem, timely and well-informed actions on the part of directors can help turnaround even the most extreme and unpromising of circumstances. Whatever the situation, getting clear advice from experts in business recovery can also help in what can be extremely challenging scenarios.
By John Baird
John is a personal finance and insolvency expert from scotlanddebt.co.uk . He specialises in advising people on how to manage their money and deal with their personal debt problems.