Each business is different, so each insolvent business will require an individual approach; however here are seven steps for turning your business around that are useful for most situations.
- Identify the problems
Go through all your business information: management accounts, sales, finance agreements, internal controls, customer services and try and identify problems and causes.
- Make a plan
Once you have identified the problems and causes you need to decide what needs to change. Then you need to break this down into actions with timeframes and the expected financial results. As you make the changes you need to measure the results against your plan. You may also need to show this plan to your shareholders.
- Talk to employees
Keep employees informed of what is happening and the plans that you have made. If people understand what is going on and what will happen and why, they are much more likely to support it. If you don’t communicate effectively then people will worry, rumors will start and morale with go down.
- Communicate with your creditors, suppliers, customers and bank
Let you bank and creditors know what is going on, and let them know your plans. It is best if you meet face to face to discuss the plans and actions you have in mind, ask your bank and creditors for support, you may even be able to renegotiate prepayments to help with your plan. Talk to your customers, you might need to reassure major customers. You should emphasize your turnaround plans and how this will improve the service for them. Talk to your suppliers, you need to reassure them of your plans and that changes your are making, and that you are confident of the turnaround.
- Improve cash management
Try and renegotiate payment terms with suppliers, consider selling unused assets or selling and leasing back, moving to smaller business premises or sub let some of your space to another business. Consider invoice finance and as a last resort consider redundancies. Cut back on overheads and expenses where possible.
- Introduce new systems
In order to turnaround your business you need to review your systems and procedures. Make sure your business is running effectively, efficiently and responsibly.
- Review your results
Measure your progress on an ongoing basis. If things aren’t working, make changes to your plans, if things are working, then stick to your plans. Report back to your employees, suppliers, creditors, customers and bank on the positive progress you are making. And once you are back in financial control of your business, learn from the experience and keep improving.
To understand the whole range of options and to get help choosing the right one for your business contact us on 0800 597 4757 or enquire online using the form opposite.
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