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Turnaround Engagements

Turnaround Engagements – Give Your Company a Chance

When it comes to the challenging economic climate in Australia, even the most sophisticated business can fall prey to volatile market conditions, cash flow pressures, corporate insolvency and claiming bankruptcy. Seeking bankruptcy help is not a sign of weakness. Rather, it is a sign of strength, because if you address the issue early enough, there might be something you can do to turn it around.

3 Steps to Give Your Business the Best Chance of Survival

When it comes to corporate insolvency and turnaround strategies, quick response time to company turmoil and financial difficulties is vital. Failure to challenge the business model, seek bankruptcy help or take strategic action in a tight financial position is what causes many businesses to fail. In these instances, it is important to introduce turnaround engagements in order to try to save the company or its business.

Below are the 3 steps to implementing turnaround engagements:

Step 1: Analyse the Situation

Before you claim corporate insolvency, determine the chances of the business’s survival, identify appropriate strategies, and develop a preliminary action plan.

Questions you need to ask:

  • Is the business in imminent danger of failure?
  • Does it have substantial losses, but its survival is not yet threatened?
  • Is it merely in a declining business position?

Analyse the three major requirements for viability of an organisation:

  • one or more viable core businesses
  • adequate available financial resources
  • sufficient organisational resources

If these requirements are present, you need to:

  • Provide a detailed assessment of strengths and weaknesses in:
    • competitive position
    • engineering and R&D
    • finances
    • marketing
    • operations
    • organisational structure
    • personnel
  • Increase stakeholder communication
  • Develop a strategic plan with specific goals and detailed functional actions
  • Ensure management is accountable for delivering those goals

Step 2: Implement the Plan

If the review identifies any major financial issues, you need to implement a turnaround plan before you seek bankruptcy help.  Some of the steps you could take in a turnaround plan include:

  • Determine the current labour requirement, and rationalise workforce where needed
  • Close underperforming business units, and focus on the organisation’s core business operation
  • Change management team and structure
  • Eliminate any unprofitable lines of business where possible
  • Identify any surplus assets, and determine whether they can be realised in a timely manner
  • Eliminate unnecessary capital expenditure
  • Improve the accounts receivable collection process
  • Focus on the business’ cash flow
  • Communicate honestly with financiers and creditors
  • Continue to focus on customer service
  • Seek advice from advisors

Step 3: Move Forward

If you’ve implemented your turnaround engagements successfully, the next and final step is to slowly return your organisation to profitability. Rather than continuing to focus on correcting problems, you’ll now focus your attention on profitability and return on equity and enhancing economic value-added.

Examples of Ways to Increase Profitability

There are many steps your company can take when it comes to moving forwards. Some, for example, are:

  • Initiate new marketing programs to broaden business and customer base and increase market penetration.
  • Increase revenue by carefully adding new products.
  • Securing customer loyalty through better customer service.
  • Rebuild momentum and company morale; transform negative attitudes to positive ones as you map out company’s future

Taking action early and seeking appropriate advice from your advisors is key in any turnaround. If you don’t, the situation may soon be out of your control.
For more information on corporate insolvency or specific insolvency services in Australia, get in touch with us for a free and confidential consultation

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