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Is your business a viable candidate for a corporate turnaround?

If you own a business or sit on the board of a company, which used to be profitable and has operated fairly smoothly, but in the recent past has shown the problems listed below, your company may be a candidate for a turnaround. It "may be", because a turnaround as described here is not always the best option. Before you put your heart into it, you must also make sure that a turnaround is feasible

Financial information is usually the most revealing concerning the desirability of a turnaround. However, just having an ear to the ground can also alert you to the need for a turnaround. So ask yourself, Does your company show the following indications of trouble and decline?

What are the critical financial problems that indicate the need for a management turnaround.

The company has been reporting significant losses for some time and the bleeding continues.

Paying suppliers is a problem.

Paying taxes and other passive obligations is a problem.

Important jobs generate a loss.

Lenders and suppliers are not giving the company the breathing room they used to and they indicate that their confidence is shaken.

Usually one of these problems is a sufficient indication that drastic corporate turnaround action is desirable.

Critical non-financial symptoms that indicate the need for turnaround:

Good clients are leaving the company.

Clients complain their calls aren't being returned.

A number of employees are telling each other or management or clients or suppliers, that they do not feel they are being led.

A number of good employees are leaving.

Management is no longer working as a team.

Usually two or more of such symptoms plus some confirmation through financial data are a sufficient indication that drastic corporate turnaround action is needed.

Other valid reasons for drastic changes: Without any of above problems or symptoms being present, there may be other reasons why as an owner or company director you may realize that the company is in danger of failure unless the course is drastically reversed. An example would be when your company is profitable, but, is very dependent on a few large clients and there are good reasons to expect they will drastically reduce the business they give you in the near future.

But, as mentioned above, it is not enough that a management turnaround is desirable. It must also be realistic.


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