Monday, March 29, 2010

Company turnaround before it’s too late

Maver Management Group works with many companies and senior executives. As a result we see first hand how companies have responded to the recession and the early signs of recovery. Many companies have failed. Some were so poorly run that failure was inevitable despite the economy. However, a significant number could have been saved if they had sought the right help early enough.

As turnaround experts, we do not just work with businesses in trouble. Many clients seek our advice for general profit improvement. Companies must be willing to admit they need help. The earlier we get engaged, the more options we have to improve the business.

The key is to critically assess the troubled entity’s business plan and review profit and loss to determine the causes of underperformance, such as rising production costs, loss of customers or increased competition. In some cases, it is simply the lack of a business plan at all. The work focuses around improving cash flow, stabilizing operations, communicating with key stakeholders to re-build their support, exploring all strategic options and developing a comprehensive turnaround strategy.

While the ways companies can get into trouble are many, there are common themes:
•Not having a solid business plan
•Not having the right management team depth of skill
•Overly focusing on across the board cost cutting
•Attempting to grow revenue without considering the impact on margins and profit
•Not having the right systems and controls in place to manage their working capital
•Not having specific measurements that track key business results or reviewing financial and operational performance regularly

The following is a summary of the 6 essential elements required in our view to achieve a successful turnaround:
1. The ability to prove business viability by demonstrating the various initiatives that will restore earnings and cash flow. Cash flow is key.
2. The ability to manage “all” key stakeholders and keep them all moving in the right direction. This can’t be done without a strong strategic business plan.
3. Strong and credible management, which might mean making certain replacements.
4. An ability to maintain or enhance the reputation of the business. Branding is critical.
5. An ability to maintain supplier credit and terms. This drives quality and cash flow.
6. An ability to release internal working capital and secure external funding. Without the funding, there can be no growth initiatives.

Turnaround management requires expertise. If you need help with any of the above items, contact us. We can turn your business around and help it thrive.



John Maver
Maver Management Group
(925) 648-7561
Maver Management

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