With corporate insolvencies at an all-time high and set to
get worse, it’s worth taking time to review best practice turnaround techniques
to ensure your business is prepared for any collateral damage.
This year the Australian business community will have to deal with an estimated 15,700 corporate insolvencies.
This year the Australian business community will have to deal with an estimated 15,700 corporate insolvencies.
This equates to a financial impact on our economy of approximately $15billion – and don’t forget every insolvency has a flow-on effect, so the impact will be felt by another 700,000 businesses.
The good news is that it IS possible to make a positive impact on our country’s rate of corporate failure and business distress.
Turnaround management is a relatively new field in Australia, and as more businesses become aware of it this will make a positive impact on the rate of corporate failure and business distress.
Guiding Principles
The following points should be top of mind when developing or executing a turnaround plan.
Stakeholder management is the key. Of course, it is important to focus significant attention on financial and operational restructuring, but any business that puts its attention here and ignores stakeholder management will suffer the consequences.
Good stakeholder management involves communicating with all key parties – financiers, employees, shareholders, creditors and customers.
Turning a business around is as much to do with maintaining confidence as it is to the initiatives being executed.
Most turnarounds fail due to insufficient focus on stakeholder management, particularly employee engagement.
It’s also important to remember that very rarely is there is quick fix in turnaround situations.
In the majority of situations the Board or CEO need to come up with one or two big strategies around which the turnaround plan can be built. This could mean a fundamental change in the business model, selling off non-core or non-essential assets/businesses, paring back the business to its core or maybe even an acquisition or merger for greater economies of scale.
