Read on to learn more about the process, benefits and how to choose the best turnaround consultant firm for your company.
What is a turnaround consulting?
A turnaround consultant helps companies recover from financial crises. They help companies manage their finances better, and often times, they help them avoid bankruptcy. This can include fixing inefficient processes, overcoming business losses and correcting bad deb structures, among other factors.
Turnaround consultants train to understand the problems facing businesses and then work with those businesses to fix them. They also work with banks and other lending institutions to ensure that the money goes towards helping the company grow.
Ultimately, business turnaround consultants aim to determine the severity of the crisis and whether or not it can be reversed.
Related reading: 5 signs a business is in crisis
What do turnaround business consultants do?
In a turnaround, financial and operational consultants will do a deep analysis of the company —including its cash position and its prospects; its customers, employees, and competitors; its control systems and important stakeholder. This analysis also answers questions like, “Is a business viable?” “Should we save it?” “Are there enough cash resources to fuel the turnaround?”
In the end, the analysis produces a preliminary action plan stating what is wrong, how to fix it, key strategies to steer the entity in the right direction, and a cash flow forecast to measure cash usage.
Services typically offered in a business turnaround plan include reviewing a company's finances, selling assets, restructuring debt, revisiting resources and repositioning the business in its market. Advisors may also analyze company structure and long-term business goals to make recommendations on how to improve performance for lasting success.
What is the difference between turnaround and restructuring?
Both business turnaround and restructuring services strive to rescue a business from liquidation. However, a turnaround is an informal period of transition, renewal, and pivoting towards growth. Restructuring, on the other hand, refers to a group of official insolvency procedures aimed at helping organizations in dire financial straits.
What company can benefit from a turnaround consulting firm?
Almost every industry can benefit from implementing a turnaround plan, but these services are usually more suitable for businesses experiencing some form of operational crisis, as opposed to those simply looking to expand or transform. With the help of a specialist, vast improvements in cost reduction and profitability can be realized – as long as the company is open to changing its operations.
Every business is unique, but there are several telling signs that a turnaround is necessary. Here are a few examples:
- If a company is regularly struggle to pay employees, vendors, and contractors.
- If debts keep growing and you're paying them back out of your own pocket. Debt consolidation can help you get rid of high interest rates and low monthly payments. A debt management plan can also help reduce monthly payments. Financial consultants can help businesses evaluate the current situation and offer solutions to financial challenges.
- If a company is unprofitable and struggling to keep afloat.
- If accounting staff or leadership can't figure out what's going wrong, or doesn't understand how to fix it.
A guided turnaround works well for business leaders who recognize that trying something different is better than continuing on the present course and risking the life of their business.
Employing a turnaround expert can help save critical money and time when you need to get your company back on track. They can provide professional advice on what steps to take to get out of debt, whether to sell assets, and even if bankruptcy is an option. They can also offer guidance on how to restructure your business and avoid bankruptcy.
Focused Energy's unique approach to business turnaround
Most troubled companies struggle with operational issues in addition to excess debt and cash flow problems. But no turnaround is successful in the long term unless a company’s underlying operations align and sustain balance sheet successes.
Whether it involves rationalizing resources or boosting employee alignment, Focused Energy understands the importance of evaluating and improving daily working procedures. That’s why we’ve assembled such a multidisciplined team rarely found at other turnaround consulting firms. With decades of experience in finance and operations repairing operations, Focused Energy singular approach pays big dividends for our clients seeking to implement a business turnaround program. Our team plays three critical roles: driving improvement projects, facilitating change and ensuring continuous improvement.
By addressing operational and financial issues side-by-side, companies can swiftly achieve dramatic results.
Related reading: 3 tips to increase profitability