Let’s take a breath and step back; Here’s how to turnaround a failing business. Companies of all sizes and in any industry can find themselves up against some seriously challenging financial headwinds at almost any moment and cash flow concerns are a part of everyday operations for many small businesses.
But if you’re in a leadership position at a failing company then the steps you take at crucial moments can make a big difference in terms of how events ultimately unfold and whether your business can survive.
Here are 5 action points well worth having in mind if you’re trying to turnaround a business facing up to the prospect of financial disaster.
1 – Take a step back
The first thing you should do if your business is in dire financial straits is to take a step back and try to give yourself a broader perspective of the real challenges you’re facing. It is often the case that business bosses will commit simply to working harder rather than working smarter in a situation where a company is running out of options and adding to existing debts as time goes by.
2 – Consider all restructuring options
If the reality of your company’s situation is that its current course is heading straight towards disaster then all options should be on the table in terms of finding ways to rescue and turn around the business. This means giving full consideration to all the ways in which your business might be saved and headed back towards positive progress and sustainability.
3 – Liquidate assets to raise cash
For many companies, cash flow problems can all-too quickly become a full-blown financial crisis that could spell the end of what might otherwise be a perfectly viable business. With this in mind, directors can improve their company’s longer term prospects by liquidating certain assets to raise cash. This may seem like a short-term approach but very often it is only by making it through the toughest of times that a struggling business can have any real hope for the future.
4 – Let non-essential employees go
For anyone in a management or leadership position at a company of any size, letting hard working and committed employees go is always going to be difficult. Unfortunately, the reality is that anyone whose efforts can be considered non-essential in a given context will need to be let go when times are so tough that the future of the business is on the line.
5 – Assess all financing options
It is easy for directors of companies to mistakenly assume they’ve looked along every possible fund-raising avenue. There are more and more funding options becoming available to businesses every year and alternative finance solutions are increasingly being used in new and innovative ways by businesses that find themselves in desperate need of extra financial flexibility. So all options should be carefully considered before it’s decided that no viable funding opportunities remain.
The road to recovery for struggling businesses is never likely to be an easy one but with the right approach and leadership, there is every chance that even the bleakest of situations can indeed be turned around and moved beyond with positivity.
John Baird is a personal finance expert from Scotland Debt Solutions. He specialises in advising people on how to manage their money and deal with their personal debt problems.