Are business turnarounds just for the big boys or should small businesses start taking a bit more notice?
Well, according to Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisers Irwin Insolvency, turnarounds are just as important for smaller concerns as they are far more prone to financial difficulties. No one knows for certain just how many successful turnarounds are achieved each and every year, but they do affect all types and sizes of business covering every sector. What is known for certain is that the larger businesses tend to seek professional help whereas smaller businesses that need the expertise most tend not to.
“The difficulty with smaller concerns is that they are mostly owner managed and are often rather reluctant to acknowledge they are in trouble let alone realise the extent of the crisis,” said Mr. Irwin.
For many troubled businesses, it may appear that liquidation looms as their only viable option. The bank refuses to lend more money, the owners are not willing or able to recapitalise and over-extended creditors refuse to allow a penny more of credit. Yet, there is a ray of hope. A skilled practitioner can generally find a way to buy time until either new sources of financing are in situ or a potential buyer is found.
“The strategy is to create a short-term cash flow cycle to support the ongoing business which will not lead to a future extension of credit whilst further finance is sought or raised or cost savings achieved. For many the whole experience is likely to represent a fundamentally different approach to business,” added Mr. Irwin.
There again, extreme circumstances call for extreme measures and for any business appearing doomed to liquidation, such a strategy might well be the last chance for survival.