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One of the more difficult challenges in business is turning around a sick company before all of the assets are under water and the company is forced into bankruptcy. Realizing the painful reality of how bad things really are is sometimes difficult or impossible for owners and senior executives to deal with truthfully. They grasp at straws hoping somehow a miracle will save them, and they will close that big outstanding proposal, and things will be back on track. This almost never happens.
Usually, people from outside the company must grab the reins and take charge of running the company. They are known in the business world as turn-around specialists, and they possess unique business skills that are developed over time from saving other distressed companies. They can be extremely challenging to deal with, but they can save a sinking ship. Your law firm and your accounting firm can provide you with the names of turn around specialists.
Several crucial events must take place very quickly. Its a multi-step process which includes:
Contacting all creditors immediately and requesting a creditors meeting to explain the new agenda and let them know you are bringing in a turn around expert
Explaining to the creditors the plan is to pay them back ALL money owned, but it will take additional time to do this
Give total cash control to the turn-around specialist immediately
Think of this person as the Fire Chief who saves the burning building, because its dramatic, and time is of the essence.
These are not fun things to watch happen because of the huge emotions involved, but sometimes bankruptcy can be avoided with some very creative thinking and decisive action. An existing business in trouble still has assets that can be exploited to drum up new sales, and the turn around specialist knows how to leverage them. Some of the things to consider are the following to generate additional cash flow:
Construct a profile of the kind of customer who had been most drawn to you in the past, and engage a mailing-list broker to furnish names and addresses of individuals or companies matching the profile
Invent new services or try shifting sideways to parallel services you might not otherwise offer clients/customers
If you have never used telemarketing to sell your product, try it with an irresistible offer.
Construct an offer with high appeal, a low introductory price, and a guarantee that removes all or most of their risk in trying you.
Visit your storeroom and catalog inventory collecting dust, or property that you could quickly convert into salable items
List any non-critical assets online with auctioneer eBay, and you might be able to turn some of your white elephants into cash quickly.
Once the turn-around person is on board, additional meetings will take place between the creditors. The challenge is to make your creditors become believers. There are situations where just more time with a fresh new approach can save the day. Remember, your creditors dont want you to fail and go into bankruptcy. I have been involved in the process, and have seen it work successfully.
William Dollar is a Senior Contributing Editor for the Wisconsin Technology Network, and has his own consulting company at www.billdollar.com
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The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of the The Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.