4 Stages of Saving a Failing Business: Part 1
The turnaround success rate for failing restoration businesses is low, mainly because most owners wait until it is too late before seeking help. A turnaround can begin only after business owners recognize and accept their reality. The first stage in a turnaround involves a systematic and comprehensive evaluation of the business' financial health, operational performance, and management effectiveness in an effort to discover the root causes of failure, develop options for moving forward, and determine the feasibility of those options. The next stage is triage, which involves taking deliberate action to eliminate waste, pursue accounts receivable, stimulate sales, and restructure debt. The third stage is stabilization, in which the focus is on creating and implementing management controls to maintain the corrective action taken in the triage phase. This could involve implementing new policies and procedures, meetings, and/or individual and group accountabilities. The final state is restructuring, with a focus on five objectives: establishing sustainability in revenue and cost control, improving the equity position, increasing working capital, building competitive advantages, and seeking profitable growth.