7 Steps Towards Your Business Recovery Plan & Making it Profitable

Business turnaround

Many business owners have been in a position where they feel that their company is falling apart around them.

When cash flow is insufficient, and operating costs are rising due to a fall in trading figures, it can appear that there is no way back.

But don’t despair – if you act early enough, there are things that can be done!

Following these simple steps will provide you with a plan to follow and give you the motivation to continue even when times seem dark. If you are reading this page, you’re already on the track to recovery.

Step 1 – Analyse the situation

Hold a meeting with the managers and directors of your company, and your accountant; anyone who understands the ins and outs of the business. Analysing where exactly the business is spending its money and how much debt it has will help you to begin understanding where the company’s failings are.

Step 2 – Start researching techniques for business restructuring

Make it your business to understand all aspects of debt management, planning, and consolidation. Any software you are able to access should be utilised to devise a plan that is backed by mathematics and logic.

Step 3 – Sell any assets that aren’t essential for trading

You must learn to think frugally here. There are probably some company owned assets that aren’t necessarily essential for your company to continue trading – liquidating these will be your first stride towards recovery.

You can use auction services or sell them in the open market; any funds raised should be reserved for getting out of debt, or investing in new potential opportunities.

Step 4 – Any dispensable contracts should be terminated

If you can do without the service that you are paying someone to do, you should terminate your contract with them as soon as possible. You may be paying your employees or suppliers too much, and this money could be better invested in the business, or put towards debt repayments.

Step 5 – Research financing options

Even if you have poor credit, remember that assets can be used as leverage to obtain a secured loan. If your customers have reliably paid their invoices on time, invoice factoring or discounting could be utilised, which would allow you to swap invoices for cash quickly when cash flow figures are low.

Step 6 – Consider insolvency procedures

If success has not been achieved through the above measures, then you may need to use a formal procedure to hold off creditors while you are restructuring. Two examples of these are CVAs and administration proceedings:

CVA = Company Voluntary Arrangement. This process creates a binding contract with creditors to renegotiate repayment terms, constructing one affordable monthly payment for all of your bills.

Administration = During the course of this period your company would be protected while an appointed IP acts to facilitate the rescue of the business.

Both of these options prevent creditors from being able to take legal action against your company, giving you peace of mind. Although it can be daunting to consider processes like this, they can help tremendously in assisting businesses that are viable but have come across problems.

Step 7 – Use a pre-packaged route

Hopefully this step will not be necessary, but if the company debt is significant and the problem has not yet been solved using all of the above routes, a company restart will allow you to continue trading without the burden of debt.

In this instance, an administration sale is arranged in which one or more of your company’s directors are able to purchase the business assets using their own personal funds. These assets could then be transferred to a newly formed company that is commonly known as a Phoenix Company.

Be aware that using any of these methods, strict rules must be followed, so ensure that you have asked for advice tailored to your company before jumping in at the deep end.

Next steps

If you feel overwhelmed and need some help, feel free to give us a call, you can reach us on 0800 975 0380, email [email protected], or visit our full service page for Business Recovery.