Does Your Business Need a Financial Turnaround Expert?
If you are a successful entrepreneur, you know how to spot trouble in your business, right? The short answer? Maybe.
If you are experiencing poor financial performance, it could be a simple monetary problem, but it’s usually more than that and beyond your capability to correct. No worries. There are experts called “turnaround specialists” who are trained to help you find the cause and implement a problem-solving strategy.
If you are seeing a decline in sales or a decrease in your bottom line or net profit, this could be a good time to call one, especially if you have trouble meeting your financial obligations with the bank or your vendors.
You need not feel bad, either. If you are a typical entrepreneur, you didn’t necessarily come into the business with a managerial, a financial or an accounting background. You had a vision of what you wanted to accomplish and were most likely focused on your core product or service, not profits. You’ve depended on your zeal and passion to fuel sales growth, but it may be time to give your company effective leadership.
Don’t be tempted to ignore early warning signs of failure because this could become catastrophic to your business, not to mention your sanity. In other words, it’s perfectly okay to reach out to an expert for help.
But before you do that, you need to be willing to face reality.
A turnaround specialist will need to feel secure that you are seriously committed to turning your business around, even if you don’t like the root cause of the problem. If you are placating yourself or your partners, and you are not willing to face the brutal facts presented to you, this would be a waste of your time and your money.
For example, an expert may learn that you are the ultimate root of the problem within the company. Would you turn a deaf ear to the suggestion that you be replaced as president or CEO? Would you be willing to sell a portion of your ownership to raise the necessary capital to save your company? Would you be willing to declare bankruptcy in order to salvage some portion of your company down the road? How about the time it would take to achieve a turnaround? It could take months or even years to effectively put a plan in motion. Is this reasonable to you?
If you answered a truthful yes to these questions, then let’s take a look at how to choose a turnaround specialist.
Needless to say, you must be extremely careful when choosing this person. Do your homework. Check for recommendations from colleagues you trust. Then double check their references; then interview several candidates.
This is a very personal experience. Even though a certain firm or company is highly regarded, that doesn’t mean the person you will be working alongside is the best fit for you. You need to select a person that you can work with and feel comfortable sharing your company secrets.
Don’t be fooled by an expert who guarantees a turnaround within a certain time frame. This is simply an unrealistic goal. Pay attention to the expert’s credentials and be sure their skills match your needs. You don’t need a lawyer or an accountant except for advice.
And it’s better to find someone who already has relationships with businesses that match your needs. If your new turnaround specialist has established ties, for instance, with new suppliers, and your old suppliers have dropped you, this could be a new avenue of success to explore. The same goes for potential bankers or vendors that you may need during your turnaround.
Be up front with your candidates about your expectations. Will they need much of your staff’s time or will they be hands on, doing most of the work? Insist on a written plan from the specialist, which should include a detailed explanation and how much it will cost.
Having a stranger enter your business will be a shock to your staff, so be sure to share the role and expectation of the specialist with them. Every employee should be excited and on board if they value the company and their role within it. Explain that this is a positive step in the right direction in order to save your company from impending financial difficulties, and you require full cooperation from everyone involved.
As the business owner, you should get an honest assessment of your company from your new turnaround specialist, as well as an analysis of how best to fix the problem or problems.
If you participate fully in the implementation of the plan and carry forward in the same fashion after the specialist has gone, your company should thrive for years to come. ■
Sources: allbusiness.com, entrepreneur.com, investopedia.com, thefreedictionary.com and wsj.com.