Venturn Help me save my business.

When a business owner approaches a business turnaround practitioner with the plea “Save my business”, there are usually three stages to helping them.

The first is to figure out exactly what the situation is and work out how bad things really are. The second is t deal with the immediate problem of cashflow. The third is to then tackle the underlying fundamental problems with a business.

Somebody crying “Save my business” will usually be in a state of panic. Ironically they are likely to be so close to the day to day running of their business that they can’t see the wood for the trees and don’t have a clear grasp of exactly what situation they are in. An outside advisor will usually help by reviewing the entire business to discover how bad things really are. While a good advisor will be understanding and have empathy with the business owner, they’ll have the advantage of being emotionally detached and thus often better able to put the problems into context and perspective. It may often turn out things are not as bad as they seem.

"The key to any plan to solve a problem that’s reached the “Save my business” stage is to control cashflow. Even a company that is making products or supplying services which are inherently extremely profitable can run into serious problems if cashflow gets out of hand."

One way to tackle cashflow is to look at which costs can be reduced. An advisor can highlight ways of reorganising production to eliminate any wasted expenditure. There may also be problems with unnecessary costs in the admin side of the business: these can be particularly troublesome as they can remain high even when production and sales are low.

Cashflow can also be tackled through delaying payments. Bills that are currently paid immediately can be delayed if supply contracts have flexibility in them. Alternatively, suppliers may agree to accept later payments from a struggling business if they can be shown that not doing so creates a serious risk of the business going under, leaving them with nothing.

The other main way to improve cashflow is to speed up income. This can involve making sure buyers settle their accounts promptly, whether by persuasion or force. In extreme circumstances, a business may have to decide to stop selling to a persistent late payer. While it may seem bizarre to tell somebody saying “Save my business” to turn customers down, it may be that the costs of producing goods for a late payer mean the deal does more harm than good in the all-important short term.

Once the panic is reduced, an advisor will often be able to turn their attention to the underlying fundamentals of a business. This can include identifying unprofitable product lines or finding areas which can be expanded. Such advice can help a company return to a more secure long-term position and reduce the likelihood of them ever having to cry “Save my business” again.

Read more of our articles