We often talk about company turnarounds, but what exactly does the term entail? A company turnaround is exactly what it sounds like. It is the financial recovery of a company that has been performing poorly for an extended period. Things need to change. A turnaround will get your business finances back where they need to be, righting the ship, so you start to see some financial gain once again.
How do you complete a turnaround?
First things first, you must acknowledge that there is a problem causing the extended period of poor financial performance. This then allows you to identify the causes, the problems, and the necessary changes you need to implement to solve your issues. You can either do this yourself or hire outside consultants to help you identify the areas where your business is failing and sort them out as soon as possible.
Who needs a turnaround?
There are particular characteristics that businesses have when in need of a turnaround. Despite this, every company is different, and there is no one-size-fits-all solution to every business financial problems.
The possible characteristics of a company in trouble might include:
- Revenues that don’t cover costs
- The inability to pay creditors
- Salary cuts
- Decline in stock prices
These problems are often caused by poor management or, sometimes, social, technological, and competitive changes that shake up the market and make your products less desirable to consumers. If you can predict substantial changes like this, it is possible to use them to your advantage and improve your company’s performance.
What is involved?
A turnaround relies on the identification of the problems and the causes that are contributing to your business’s poor performance. Then, you need to identify the solutions. This might involve:
- Updating manufacturing processes
- Changing your management strategies
- Strategic spending cuts
Who can help?
There are people who have trained specifically to help struggling businesses perform a turnaround. Turnaround consultants are invaluable to a business looking to see the light at the end of the tunnel as soon as possible. They are sometimes brought in by lenders who want an independent opinion on the current situation, but their duty of care is often joint to the company and the lenders.
Turnaround consultants add value by highlighting strategic solutions that may not have been clear before
Restructuring officers may also play their part in a company turnaround. They usually join the company board or temporarily become an officer within the business so they can implement the changes to invoke a turnaround.
For struggling companies, there is help available to get you back on track. But, it is imperative to do this as soon as possible to avoid an unfixable situation.
Irwin Insolvency specialises in corporate recovery. Our specialist consultants take positive, practical steps to restore businesses to health and profitability. If your business is struggling, it is best to call us as soon as possible so we can stop the problem in its tracks. Just call 0800 009 3173, and we will be more than happy to help you.