Act quickly and decisively to turn around your troubled business, says leading Liverpool accountant
Peter Taaffe of BWMacfarlane says closure and collapse isn’t always inevitable and if directors act early, and decisively, a business in turmoil can be turned around. Tony McDonough reports
When a business runs into trouble directors, staff and suppliers can often fear the worst.
In the last few weeks one of Liverpool’s best-known retailers, Rapid Hardware, has collapsed with more than 50 jobs lost.
However, closure and collapse isn’t always inevitable and if directors act early, and decisively, a business in turmoil can be turned around.
Peter Taaffe, managing partner of Liverpool accountancy firm BWMacfarlane, says it is when business takes a downturn that the dynamism of the entrepreneur comes into its own.
“Inertia will kill you. The key is to identify the problems and act swiftly to implement a plan,” said Peter.
“When you are in the middle of a crisis it is too easy to become a rabbit in the headlights but there are always steps you can take.”
At a recent BWM seminar for aimed at the charity sector, Peter outlined some of the options open to an organisation when things start to go awry. His top tips are:
- Costs: Now is the moment to take a hard and fast look at your overheads and you need to be brutal. Look at all the things you spend money on. If they don’t add value to the business, ditch them. That includes the small things. Free tea, coffee and biscuits may be a nice touch but cutting out small, unnecessary costs could add up to a big difference.
- Negotiate with suppliers: How much are you paying for your photocopy paper and your staples? Now is the time to strike a better deal. You’d be amazed how flexible some suppliers will be if they are keen to keep your business.
- Strategy: The way you did business may have worked five years ago – but times change. Why are you losing business? Speak to customers or former customers and find out what they actually want from you. Identify the products or services that bring in the most revenue and focus on them.
- Cash injection: If you are convinced your business is viable then why not convince others of that as well. At one time it was the bank or nothing. The funding arena is now much more diverse and there may be someone out there willing to invest.
- Experts: Don’t hesitate to bring outside help. Experts such as accountants and turnaround specialists can come in a look objectively at your business and help you with the points above. Seek a formal opinion on whether your business is a going concern.
- Communicate: Keep staff, customers and other stakeholders informed as much as you can. Once you have put together your turnaround strategy you need everybody on board if it is going to work.
- Merger: Joining forces with another business may be the way forward. You may not see it as the ideal option but if it keeps as many people as possible in a job, it may be the most appropriate one.
Peter added: “In the real world a turnaround isn’t always going to work, at which point you have to look at other options such as administration or liquidation.
“But there are always options before things reach that point. The key message is always to act quickly and decisively.”