Turnaround management, In a nutshell – expert advice from Samuel Talby at FRP AdvisoryClick here to view the transcript
The reasons can be simple, or complex, and range from: change in market conditions, availability of financial resources, bad debts suffered or inefficient management structure.
The turnaround practitioner’s role, is to assist the business owners, in conjunction with relevant stakeholders,
to formulate, and implement, a strategy to avoid a troubled company’s situation deteriorating, over time.
It is a collaborative process, led by the turnaround practitioner.
There are three clear phases, which in hindsight become evident:
Phase one – Invisibility Phase – The issues facing the business, are only visible from within the business.
Phase two – Translucent Phase – The issues begin to become visible to the outside.
Phase three – Total visibility – The issues are known, and are transparent to the outside business world.
Action needs to be taken, before phase three occurs,
because if a business is facing financial distress, more and more unwanted interventions from “creditors”, together with the involvement of their professionals will take place.
The ability to address myopic self-interest will narrow, and the scope to address problems without recourse to insolvency legislation, will reduce.
When business owners, or influential stakeholders introduce a turnaround practitioner, this is their recognition that change is needed, and importantly that the business itself, does not possess the skills or experience, to bring about required corrective change.
A classic turnaround involves:
Understanding the depth of the problems being experienced – severity or otherwise,
stabilising the position, providing a route map to recovery – be that business transformation or corporate renewal.
Implementation and monitoring, what is always underestimated in turnaround situations, is the need for business owners, to invest the required emotional capital involved,
and a willingness to accept change.
For a successful turnaround to succeed,
the correct turnaround professional needs to be chosen. “Best fit”, in terms of relevant experience, and a track record of success, is essential.
In a nutshell, that is turnaround.