Turn ambition into achievement

Venturn The secrets of a business turnaround.

Carrying out a business turnaround is somewhat like trying to turn around a runaway locomotive.

You need to first put on the brakes. Then you need to get it moving back in the right direction. Sometimes you need to streamline it before it will gather momentum. And in some cases you have to accept it is broken and find the best way to salvage what you can from it.

The key to the first step of any business turnaround is realising that in the short term, being profitable or loss-making is not necessarily as important as whether money is coming in quicker than it goes out. In good times, this isn’t a problem as everything runs smoothly. In bad times it only takes one client to pay more slowly or one supplier to demand payment more quickly to upset the rhythm and leave you with a devastating cash shortage.

"A turnaround practitioner will be able to bring their expertise to look at your situation with a fresh pair of eyes, without being distracted by the day to day stresses of running the business."

They may be able to find ways to get payment more quickly, buy time with people you owe money to, or arrange a cash injection to cover a temporary cash flow problem.

The next step of a business turnaround is sorting out the fundamentals of your business. With the help of  a company doctor, you will be able to look at more permanent solutions to boosting income and cutting costs, whether this be working more efficiently, developing new income streams, or dropping unprofitable products or services from your business.

Often a company will fail to start a business turnaround in time because the owners are too stubborn or too emotionally attached to make the necessary changes. This is where a turnaround practitioner can help: while the ultimate decisions are still down to the business owners, the turnaround practitioner can help give them a clearer understanding of the pros and cons of the various options open to them.

Sometimes a full and frank assessment of a company’s standing will reveal that it really is too late for a business turnaround. However, this is not the end of the world as there are plenty of options. For example, you may be able to sell your business as a going concern. You could raise enough working capital to get through a bumpy patch by selling a stake in the business.

In some case you may even be able to use the pre-pack or “phoenix” technique in which you set up a new company and voluntarily wind up the old company (rather than waiting till it goes bust), selling the assets to the new company as part of the process.

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