□ Are you worrying about where to find the money for the next payroll?
□ Considering filing for a business bankruptcy?
□ Afraid to answer the phone in case it’s a creditor?
□ Meeting soon with your unhappy banker to persuade him not to call your loan today
□ Searching the web for business turnaround, bankruptcy, receivership and insolvency information to help your company.
There are 3 vital factors that any person leading a failing company must consider. These are:
1. Stress And Worry May Keep You From Saving Your Company
2. Trustees, Lawyers and Accountants Don’t Have All The Answers
3. Innocent Mistakes Often Kill Troubled Companies
Factor #1: Stress and Worry May Stop You from Saving Your Company
Here are some common worries associated with a failing company:
- You can’t pay the employees on time. What can you do about it?
- Is bankruptcy the right answer? Will this save your company or kill it?
- Should you pay your taxes? What happens when CRA or some other authority padlocks your door?
- Can you make your loan payment? Should you ask your banker for help? Will you screw up talking to your banker causing the bank to foreclose?
- You’ve made personal guarantees. What happens when the business fails? Will you be working the rest of life to pay these debts? Could they take your house?
Here’s the problem. Worrying is taking valuable time away from you… time that you should be using to save your company.
And it’s a vicious cycle. Because your worries are stopping you, your business declines further. And this causes even more worry and less action. You are the rabbit in the headlights.
Factor #2: Trustees, Lawyers and Accountants Don’t Have All the Answers
Trustees are experts at structuring settlements to the advantage of the creditors. But they have an accounting background and have no insight into how to salvage a falling business and return it to profitability.
Most lawyers have a passing acquaintance with the Bankruptcy and Insolvency Act. Unless they are working with the Act all the time, they are not aware of the changing politics of debt and what it takes to keep creditors happy.
Most accountants see burgeoning debt as a business killer and urge you to pay it down. They deal in ratios and cash flow but cannot help you rebuild a broken business.
Factor #3: Innocent Mistakes Often Kill Troubled Companies
Because you’re not an expert in business crisis management, you’re certain to make silly, but honest mistakes right now.
Do you know what to do when…
- The bailiffs are at the door to seize your equipment?
- The bank calls your loan?
- You can’t make the rent payment?
- The CRA padlocks your door?
- Your biggest creditor threatens you for a payment but all the cash you have is for the payroll this week.
- A creditor is asking you to make good on your personal guarantee?
The list could be much longer. You can just imagine all the problems for which you don’t have an answer. And when you decide wrong, you could be shutting your doors shortly and paying your creditors out of your own pocket.
Here’s How You Can Fix The Problems and Stop the Worries.
Call in a professional crisis manager. Why?
A turnaround specialist enters a company with a fresh eye, knowledge and skills and enjoys complete objectivity. The professional is able to spot problems and create new solutions that may not be visible even to company insiders simply because the latter are too close to the subject.
The turnaround manager has no political agenda or other obligations to colour the decision-making process, allowing him or her to take the unpopular yet necessary steps for survival.
Experience within a particular industry may mean little when a company is facing bankruptcy and a loss of revenue. A turnaround specialist brings experience in crisis situations. Like a paramedic, the talent lies in making critical decisions quickly in order for the patient to have the best chance at recovery.
Operating in the eye of the storm, the turnaround specialist must deal equitably with angry creditors, scared employees, and wary customers. With the highest stakes on the table, clearly this is no assignment for the faint-hearted.
When do you call in the professionals?
Most businesses can be salvaged, provided that the business idea is still intact and there are still customers willing to buy. It is not possible to turn around a buggy whip manufacturer, for example.
But the timing is important. Each day lost in not hiring the expertise translates into just two things – more cost and more pain.
Having a Business Turnaround Strategy can help you Build Your Business and create a more profitable company.
Article written by Andrew Gregson, Senior Partner at Floodlight Business Solutions LLP