As the names imply, turnaround and restructuring are plans made by businesses aiming to avoid going under. But what puts a company in this situation and how can they adapt to map the flight plan to a better future?
Turnaround typically follows the path of underwhelming performance leading to a rebuild to recover financially. While you might think of turnaround in terms of your own business, entire nations or individuals can enter periods of turnaround to recover financially–and sometimes organizationally.
Most importantly, to effectively begin turnaround, an organization must pinpoint issues and weak areas before they are ready to consider changes. Only then can they develop a sound strategy to address what has not been working.
The opposite can also apply, what HAS BEEN WORKING that you want to do more of! A Company can restructure to do more of that for growth!
In other instances, companies utilize restructuring to adjust or completely overhaul the financial and operational aspects of their businesses. A company will typically begin restructuring when facing unavoidable financial burdens, they are not equipped to deal with. Some reasons to restructure include:
- Deteriorating financial fundamentals (Are we tracking the right KPIs?)
- Insufficient revenue
- Poor earnings performance (Profits could be higher)
- Overwhelming debt
- Low revenue (Are we scaling as fast as we could be?)
- The business is no longer competitive
- The business faces too much competition in their arena
Restructuring occurs at the corporate level to modify various elements of business practice to avoid further fiscal harm and render the company successful. In many cases, CEOs utilize restructuring to avoid liquidation.
Regardless of what path your company chooses when things get rough, both restructuring and turnaround aim to bring stability to your operation, allowing it to grow and thrive once again.
How to Turnaround into a Brighter Future?
After identifying the core issues of a business and making pragmatic decisions to promote decision-making and goal prioritization, many companies invoke the help of the Growth CFO to measure the distress.
In fact, the Growth CFO 3-person teams are well equipped to identify stall points in new customer acquisition, people capacity, and low financial performance. This includes a top-down analysis of the entire company–even areas not identified as clear problems. This allows your company to address the most critical areas first after deciding on a strategy.
Sometimes this turnaround period can last a few months or years. However, because a turnaround or restructuring for growth encompasses most if not every segment of your business, you could see the efforts/engagement lasting three years or longer.
Some clear indicators that your business needs a turnaround include flat revenue, flat profits or losses, insufficient cash to pay bills and creditors, and a need to lay off employees. If you’ve noticed your business’s products are outdated or your competitive advantage wanes or fluctuates, you might want to investigate some restructuring or turnaround strategies. Or quite possibly, maybe your new business flow has slowed.
What Restructuring Looks Like?
Similarly, for a turnaround, your business will start restructuring with an analysis of core business functions and problems. More specifically, you’ll need to review your capital structure for the size of financing and relevance. This lets you get more intimate with your economic value and where and why you’re spending what you are. Be proactive about lining up financing!
Restructuring often includes a deep look at better finance options or closing certain funding sources. Some key roles in your company might need new names to really get the job done. Because of the innately financial aspect of restructuring, many businesses open or redefine their CFO role for accountability, experience, and foresight going forward as Growth CFOs.
During the restructuring, your company can hope to figure out the 80/20 on what is driving the outcomes that you want more of, aligning sales and operations, and significantly modifying its debt, structure, and funding, so it’s important to analyze problems quickly. Many businesses adjust the terms of debt or consolidate it to pay their debtors. Sometimes you might want to look at costs, cutting payroll, or overall reducing your business’ size.
You could even divest assets to focus more on your core and gain a cash infusion. Overall, if you get the help, you need and promptly identify issues, your company should come out of the restructuring with smoother and more economically sound business operations.
How will the Growth CFO 3-Person Team help?
Whether or not you’re hiring new leaders during your turnaround or restructuring, experts will always help you navigate the process more effectively. With a turnaround, growth modeling, or possibly hiring a Growth CFO, you get someone with years of experience who won’t pull their punches. Growth CFOs are straight shooters.
Getting this outside perspective allows countless businesses to view their operation through an unbiased lens. Likewise, Growth CFOs are laser-focused on charter a flight plan forward –something you frankly might not have the time for while turning around and trying to keep the aircraft soaring.
Some key areas where a Growth CFO will help include:
- People Capacity
- Winning New Customers
- M&A advisory
- Operational improvements
- Debt capital advisory
- Crisis management
- Financial operational strategy
- Stakeholder communication
- Turn your financials into a plan for growth and higher levels of profitability
How Foresight CFO Is Different from Other Outsourced CFO Services?
At Foresight CFO, we provide outsourced Growth CFO services tailored to meet your specific needs. We provide consummate operational and financial services aimed to grow your business through effective strategy and hands-on follow-through.
Schedule a 25-minute Discovery Consultation with me, today to learn a little more about us as we get familiar with your operation.