A twelve-part blog series outlining how to save, turnaround, and grow, your struggling or failing professional client service consultancy, architects practice, design studio, marketing communications (marcomms), PR, digital or creative agency business.
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Total Business Turnaround
Part 04 | Your Business Team
The importance of your team and teamwork cannot be overstated, but are you aware of who is on your team? It's not simply the members of your management team! Your friends, family, your network contacts, employees, consultants, they’re all your team.
Finding and working to the best effect with those members of your team who can help you the most is a real skill that takes time to develop, but it is well worth it.
Choose people you can trust, that are qualified and experienced to help you when you most need it but keep an open mind. It may not always be apparent which of your team, if any, can help you when you most need it.
Your accountant does far more than simply count beans. Depending on your needs, he can have a wide-ranging role in your business above and beyond generating management accounts including the roles of tax agent and business advisor. Other things your accounting processional will be able to do for you include process coordination as well as helping you to interview candidates for your financial management team.
Your Management Team
A strong management team is essential to making it through a restructuring and coming out of it healthy and profitable. In this section, we will talk about three key areas: The board, your management team and key staff.
The Insolvency Practitioner
If you are insolvent or are considering buying a distressed or liquidated business, your accountant should be able to introduce you to a Insolvency Practitioner (IP) and work with you throughout the process. Remember that depending on how up-to-date your information is, and the complexity of your business structure, there will be a lot of communication before, during, and after the restructuring process.
You and Your Legal Professionals
If you intend to purchase the assets of your old company in a pre-packaged deal, a solicitor will generally be suggested by the IP as he knows how they work and the structure of the purchase agreements the IP prefers to use. The solicitor is, of course, independent. It’s up to you to negotiate the contract with him to the point where the IP accepts it. The IP is legally bound to act on behalf of the creditors, and as such will be expecting best value for the business assets. You will need to consider the fees, agreements and contracts, communications and record-keeping.
If you intend to purchase the assets of your old company, a surveyor (also known as an appraiser) will generally be suggested by the IP as he knows how they work. The surveyor is, of course, independent and it’s up to you to negotiate the valuation with him to the point where the IP accepts it.
The IP is legally bound to act on behalf of the creditors, and as such will be expecting best value for the business assets. The surveyor will look at the book value of the business assets and take a walk around of the premises. You don’t have to be there for this, but it may be worth it to ensure that items are picked up correctly and not over-valued, especially if they aren’t yours.
Dealing with Banks
It is something of an understatement to say that having the best relationship you can have with your bank manager is a must. You need this person firmly on your side in order to facilitate lending and support when times are difficult. However, this personal also has a responsibility to the bank, so you must be able to provide information and communication to ratify your position when asking for help. In addition to your relationship with your business banker, you should look at issues like using your bank as a sales finance provider, the use of a back-up banker, alternative bank accounts and personal guarantees.
Sales Financing Companies
Sales financing is the practice of receiving funding from a bank or other lender, against a proportion of a company's approved invoices. Usually a company offers customers credit, meaning that between an order being placed and settlement of the associated invoice, the company may have to make clever use of its existing cash-flow to pay suppliers and allow it to make further sales.
Financing via this process provides immediate cash-flow, which can then be used as working capital to satisfy suppliers and meet the day-to-day operating costs. Any company that finds a gap between raising an invoice and receiving payment places a strain on their available working capital may want to consider sales financing. There are two main forms of sales finance, both offering the benefits of a more consistent cash-flow. They are factoring and invoice discounting.
Even Your Competitors are on Your Team
You’ve heard the expression keep your friends close and your enemies closer. Well it holds true in this case. This may surprise you, but your competitors are part of your team as well. They act as a barometer for what’s going on in the market and an indicator of where your weaknesses are as a business. Without competition, getting better at what we do and improving our products would take much longer.
On the other hand, depending on your relationship with them and their general level of professionalism, if given the chance they will make life difficult through you during this period of change and restructuring.