Turnaround Consulting Services
Although we can offer finance for struggling businesses it is important that there is an actual change in the business. As is so often said, money on its own will not be a magic bullet. The problem of poor performance and financial stress is not always a bit of bad luck but can be due to a myriad of issues. The purpose of turnaround consulting is to identify the causes and set out a path for change.
What are the likely causes of distress that turnaround consultants can identify or address;
- Lack of a business plan
- Poor financial controls
- Lack of information across the business
- Flawed products or services
- Incorrect pricing policies
- Lack of working capital
- Expensive working capital
- Management disagreements
- Too much money taken out by directors/shareholders
- Poorly performing sales teams
- Legal distractions
- Information Technology issues
If you apply for finance then you will need to address problems in the business to ensure that any new capital is used to best effect. This will ensure that any turnaround can deliver and return the business to profitability.
Obviously, many issues on this list above are best addressed by the senior management team but turnaround consultants can help management by identifying critical issues that need to be addressed first.
Financial controls, financial restructuring and the injection of working capital are the main ways that a turnaround consult can stabilise your business. We can restructure a balance sheet with a powerful insolvency mechanism called a company voluntary arrangement (CVA). This allows the directors to remain in control and write off a substantial amount of unsecured debt and pay what they can afford over a 3-5 year period. Even the mere threat of this procedure can help bring creditors to the table.
Problems with suppliers of working capital is also a critical part of the process. It may be that your factoring company is not allowing as much drawdown against invoices or is getting nervous and putting up the costs. Once this becomes a problem then a vicious circle can develop where costs of capital go up putting more pressure on the business which then makes it riskier so putting up the cost of capital!