The Turnaround Strategy is a belt-tightening strategy implemented by a business that has experienced a period of loss.
The company now feels that quicker commercial planning needs revisiting from a stronger strategic perspective to prevent irreparable damage affecting the profitability of the company.
This turnaround strategy is parallel to a restructuring process where the company transforms the period of loss into one of profitability and balance to support future goals.
We must also factor in the current pandemic situation that as a nation we find ourselves in.
Changes in a firm’s competitive advantage and lack of innovation with products and or services are also indicators of the need for a Turnaround Strategy as well as dropping the ball with transactional activity.
THE WARNING SIGNS CAN INCLUDE:
Missing tax payments.
Missed payments to HMRC are often the first clue to business insolvency. Companies often decide to miss PAYE and VAT payments if they are struggling for cash because there are no immediate consequences to non-payment.
Always relying on your overdraft.
If you have no funds in your business account, you may need to keep using your overdraft to its limit in order to pay creditors and staff. If you keep doing this your bank may become worried and may reduce your overdraft or request some form of security to be put down.
Late payments to creditors and reduced credit.
If you are constantly struggling to pay your creditors on time, and only pay once you receive warning letters you may also find that your suppliers reduce the amount of credit offered to you or stop doing business with you at all.
Your customers are taking longer to pay you.
If your customers are taking longer to pay you, you will be spending more time chasing them and more time trying to juggle your money until you do get paid.
Lack of processes and procedures.
If you don’t have a business plan, cash forecasts and budgets and management don’t meet regularly to plan ahead, then you could find that some essential tasks are not getting done because of lack of planning and control.
Directors overspending.
If Directors are taking very high salaries and expenses are getting out of control.
People issues.
If you spend the majority of your time firefighting, management are not getting on and working together and morale is low with a high turnover of staff.
Starting the Process
In most cases, the first step in moving into a turnaround phase is to acknowledge the problems creating the downturn. In the case of a business, they may examine changes in management or to problem identification and solving strategies.
If you look deep enough, there are always alternatives when you are facing the challenges encountered with re-charging your business or indeed, mitigating any personal financial impacts that difficult trading times can bring.
We will work on your behalf with creditors, tax authorities, bailiffs and legal firms allowing all stresses and problems to become our problem. Our aim is protecting your credibility in the commercial landscape, thus retaining a customer centric culture and limiting the drop in delivery to them.
Strategic Growth Solutions, turnaround management team will review the primary causes of the company’s failure and devise a strategic plan that may include restructuring or re-positioning the business to achieve the sustainability / growth objectives desired.
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