What is business turnaround
Business turnaround usually refers to the financial recovery of an organisation that has been performing poorly for a period of time. There could be a number of reasons why a business needs rescuing – you may be losing serious revenue, or you could be facing insolvency. A turnaround usually comes into effect when a business has tried to self-rescue, but efforts have been unsuccessful.
What are the signs of a distressed business?
Often called “Distressed Businesses”, these businesses usually recognise that they are in need of urgent rescuing: They don’t understand, nor do they accurately prepare, the necessary financial statements and reports, they hang onto money-losing customers that cost more than prosper their business, they don’t understand their costs and as a result spend money on the wrong things, at the wrong time and cannot keep track of waste within their organisation, there is no clear sense of an organisational strategy with a leadership team throughout the business that clearly understands their own responsibility and ownership, and they simply fail to conserve cash enough to see the business through. So, when a company sees itself in financial distress, this often means that they cannot meet, or have difficulty paying off, their financial obligations to its creditors, typically due to high fixed costs, illiquid assets or revenues sensitive to economic downturns.
What causes a business to go into distress?
Books and studies have been written about this exact topic – and the drivers of distressed businesses could be anything from having the wrong management team in place with an unsynchronised focus through to ill-management of costs, through to an outdated business growth strategy. However, there is something far more disturbing that is causing many organisations around the world to face distress – and those stem largely from business environmental factors. We live in an age where markets fluctuate overnight, client-demands are constantly changing, changes in financial lending legislation, changes in bank interest rates and more, are having a direct impact on how we run our businesses, and what our growth strategies look like. For many, their business strategies are simply not robust enough to withstand, and adapt to environmental changes like these – and at the first sign of challenge, undermines their foundation and renders them vulnerable to business distress.
How does a turnaround start?
As with most turnarounds, an organisational turnaround usually starts with accepting that you have a problem, and that you need help. Although the term “turnaround specialists” is relatively new in the international business world, this has been happening for many years, but in this era of rapid, sometimes painful, change, it’s these specialist expertise that are quickly becoming sought-after. Businesses fluctuate according to market demands, and can very quickly find themselves lagging behind. And all too quickly, they find themselves not being able to cope at all. A turnaround simply starts by tapping into expertise that has:
- Proven experience of delivering financial rescuing to other organisations
- Proven experience of running a variety of businesses successfully
- Proven experience of understanding your market, your client-base, your industry-trends
- Independent insight that is focussed on your success and helping your business grow.
Why do you need someone outside of your business to work within your business?
Business turnaround specialists enter your business with an independent, fresh view point. They have led turnarounds before, and can recognise commonalities within your business that point to improvement. An independent viewpoint gives them the ability to identify opportunities and effect change, where the business may not have recognised it already. There is no political agenda and no ego – they simply want to see your business grow, and flourish. And when it comes to difficult decisions being made, they can help you make them because they are slightly removed from the emotional connection to your business. They step in when you need help, and can even take over the reigns if that’s what it takes. Most turnaround specialists bring experience in handling crisis situations – and when an organisation is facing a critical end like insolvency and massive loss of revenue, the turnaround specialist is able to make key decisions quickly and accurately – delivering immediate steps towards rescue.
And here’s why CFPro Ventures can help
We have been involved in rescuing businesses in distress for many years. Our team has worked with industry giants such as the London Underground (Transport for London), General Motors, Shell Oil & Gas, Tarmac TopBlock, Energis Communications (Now Cable & Wireless) and more to help them regain profit and save on costs. We have experience across a wide variety of industries and have led businesses ourselves. We are best-placed to help lead a business to profit, because we have already done that with our own. Through an established, and reputable Partner network, we are able to work with almost any industry and any business size. We believe in a transparent, no-nonsense approach – and simply get the job done.