Your Business Turnaround

How International Expansion helps you save, turnaround, and grow your struggling professional client service consultancy, design, marcomm, PR, digital or creative agency business (checklist).

 Save Turnaround Grow Your Struggling Consultancy Practice Studio Agency Business International Expansion

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.

Click to listen to the audio or read the full transcript below and sign up for my Creative Core newsletter and I'll send you a quick-start business turnaround email course complete with 96 point action checklist and business turnaround strategies you can start using today.

Total Business Turnaround
Part 12 | International Expansion and
Developing Business Abroad

One of the advantages of tackling new markets abroad is that it allows you to reinvent your business approach, offering a more holistic service overseas and generally being more successful. You will have to be more specific about what you do, of course, but that can only improve your business. 

Before you dive into any new market, you need to do enough market research to understand what is really needed in your target market. That way, you can tailor your marketing efforts so they will do the most good.

However, when you are entering foreign markets, your research needs to encompass far more than just the market. You need to develop knowledge of the culture and the bureaucracy you will have to deal with. 

Appointment and Insurance

Before setting up shop in some new foreign market, you have to take care of a few things first. Begin by extending the geographic limits on your professional indemnity insurance (PII) to include target area, providing the necessary appointment and scope of work documentation when you do.

PII normally only covers your immediate and neighbouring regions, for example UK and the EU, so these regions need to be expanded. Try to use standard forms of appointment, but be mindful that despite your target regions bureaucracy, these forms may be deemed too onerous.

If that is the case, you may have to resort to countersigned letters of authority with accompanying schedules of work and responsibility matrices.

Aspirations and Expectations

Depending on the market, the client may be expecting your innovative new solution to be cheaper than their traditionally produced solution. You need to manage these expectations. It’s a good idea to visit your potential clients, their offices, factories, outlets, and developments, and to take an interest in them regardless of the differences that you may experience.

Your goal should be to introduce new ways of doing things that can give your clients a greater edge over their competition and meet their expectations in ways they may not have considered before. You also need to make sure that the product you are planning on designing or producing in the local target market area can be delivered.

You should have someone skilled and experienced in the local culture and working processes leading the production of your service or product, or construction site.

This is all about building the team. 

Communication

Communication here is a key to success. Without it, things will bog down terribly. Remember that the way you do things and the issues you have to deal with at home may not hold true in your client's country.

Some of the things you need to watch out for include illogical or corrupt bureaucracies, conflicting trade rules, client aspirations and expectations, your client's accounting practices, their decision-making processes – even the actual number of clients involved and the consultant team available!

Question everything, including client decisions and requests. It’s best to continually remind the client and his team of the values and aspirations all involved.

Rules and Regulations

Part of your market research should be devoted to fully examining the local and national rules and regulations you will have to abide by when you do business in your foreign market. You do this to give yourself a broad understanding of the issues you’ll face and the processes you’ll need to go through.

Expect conflicts and contradictions. You want to know how strict the rules are, whether they more guidelines or if they are rules that must be followed to the letter. It’s best to try and get written confirmation to proceed with a change, especially if it’s related to a change that is affected by the rules and regulations of that region.

Make sure you have people fluent in the local language. It also is a great help to have a local attorney with command of both your language and his own. 

The Benefit of Competitions

Events and opportunities of this sort promote you as an international business and expose you to judges, clients, consultants, and journalists in your target market.

They also give you relevant material and experience to utilise in your marketing and PR campaigns and they show your flexibility and understanding of different cultures, especially if you win or are placed in them.

Participating in these events demonstrates your interest in the issues faced by your target market and helps to build your authority within your target network. You might even consider these events to be the the beginning of your network.

Attending Conferences

Conferences offer another important PR and marketing opportunity that you should not pass up. Attend, enter awards, and speak at conferences to get your name known. You can be part of a larger group, host an exhibition stand, a party or some other event to help with your networking and socialising.

Be sure to return favours, helping them out with competitions, judging, news items, comments, and seminars. Also, conferences and conventions always receive coverage and you want to take advantage of that. Befriend and network with journalists, publishers and media partners, as they can introduce you to many more people and may be willing to tell your story.

Enter New Markets Through Collaboration

Another way to work your way into a new foreign market is to work as a consultant or team member with a local established company. This will give you valuable experience that you can take to the next project. 

The Dos and Don'ts of International Business 

Here are the lessons, the dos and don'ts we learned while pursuing business in Europe, the UAE and India. They are based on our experiences, but the underlying principles will work wherever you are. They include:

  • Do be prepared to be patient!

  • Do learn how to negotiate fiercely – but work towards win-win results.

  • Do actively seek out contacts you know from your home network.

  • Do make sure that you have someone skilled to run works locally to ensure quality.

  • Don’t assume working in the Middle East is anything like the same as working at home.

  • Don’t ever indicate you can drop your price. Clients like to haggle, so let them work at it.

  • Don’t take it personally when you’re kept waiting for 4 hours, or a verbally agreed contract falls through. It's normal practice. Just make sure you’re aware of the culture and be prepared so it doesn’t throw you off your game.

And many more!

How New Business and Sales help you save, turnaround, and grow your struggling professional client service consultancy, design, marcomm, PR, digital or creative agency business (checklist).

 Save Turnaround Grow Your Struggling Consultancy Practice Studio Agency Business Clients New Business Development Sales

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.

Click to listen to the audio or read the full transcript below and sign up for my Creative Core newsletter and I'll send you a quick-start business turnaround email course complete with 96 point action checklist and business turnaround strategies you can start using today.

Total Business Turnaround
Part 11 | New Business and Sales

If you have been in business for any length of time, you already appreciate that there is very little in life that isn’t a new business opportunity. It really comes down to keep your eyes open and accepting the fact that if you are prepared to turn up, pay attention and contribute something of value, new business will come to you. 

Personality Types in Sales

Some people are inherently able to sell, others are not. What sets those who can sell apart is that they,  quite often without realising it, are able to identify with different personality types and respond almost instantly. This permits them to build rapport with their prospects, which leads to continued new business opportunities and sales.

In simple terms, if you wish to build rapport with someone, the fastest way is to respond or approach them with the same mix of personality traits – dominance, influence, steadiness, and conscientiousness.

Giving Value before Offering Value

Think about how you can give value ahead of offering value, or being asked to provide value. Provide regular articles, talks, and consultations, and you not only hone and perfect your expertise and business offer, but you also give value to potential and existing clients who will then come to you for the more complex problems that they are facing.

If people know who you are before you network with them, you are ahead of the game. It’s a lot easier to network and meet new people when your reputation precedes you. It’s then no longer about you, but about what you can find out and discover about the other party and how you can help them and give them value.

The Importance of Networking

You have to have the right people around you to support your efforts and to keep you on an even keel; people to bounce ideas off of, people to point you to new business, people to turn to when things get tough.

That is what your network is all about and you to get about building it as soon as you can. Show up at events and participate, meet people within and outside your industry, and remember that everyone you meet can potentially help you in some way as long as you are willing to help them as well.

Making the Pitch

The pitch is where you make it or break it. Whether you leave them wanting to know more—and open their wallets to you—or just wanting to show you the door depends on how you approach them in the given situation and on the way you communicate your message.

You want the person you are speaking with to want to take the next step, whether that is a purchase or a meeting to discuss you products further.

Effective Negotiation

If you are negotiating fees and you need to agree on a price, there are three rules of thumb you need to follow, and if you prepare properly you can’t go wrong. That is, of course, assuming you have the opportunity to prepare. Wherever possible, always give yourself that opportunity.

You also need to understand your cut-off points, and make sure you don't get put on the spot and commit to something you can’t deliver.

Authority and Expertise

The client is considering your firm for a potential project or relationship because, to this point, you have conveyed that you are experts within your field and can help them solve their immediate and recurring problems.

It’s important that your team establish what I call skill boundaries; it’s very easy for an unsupported new business person or project manager to fall into the habit of adopting the role of one of your more specialist staff, especially when they are very engaged with the process.

Obviously, this is very unlikely with highly technical expertise, but it’s something to be wary of in other areas of your business.

Tendering

When tendering, you need to have the background information about the project and your client. You could find out something your competitor does not know, and that might make all the difference. It also provides you with the information you need to create a truly tailored response to the client’s brief. Also, be truthful, but never include something that will create a barrier to you being selected for the job. 

After Sales – The Customer Experience and the Importance of Follow-up

Your ultimate aim is to leave the client delighted with the whole experience of your business. That means from the moment they come through your door to the moment you hang-up after the follow-up phone call, you are giving them the red carpet treatment.

Why? Because you want them to feel guilty that they are sending any work elsewhere. In fact, effective follow-up after providing solid customer service can turn your satisfied clients into cheerleaders for your business.

How Business Marketing helps you save, turnaround, and grow your struggling professional client service consultancy, design, marcomm, PR, digital or creative agency business (checklist).

 Save Turnaround Grow Your Struggling Consultancy Practice Studio Agency Business Marketing

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.

Click to listen to the audio or read the full transcript below and sign up for my Creative Core newsletter and I'll send you a quick-start business turnaround email course complete with 96 point action checklist and business turnaround strategies you can start using today.

Total Business Turnaround
Part 10 | Marketing and PR

Marketing and Public Relations are not merely outward facing disciplines. They should also be internally focused. The reality of the outside world is often a reflection of your inside world. This is the same in business; keep your employees, managers, shareholders fully informed and engaged with your mission and the good work you are all doing.

Doing this makes communicating with the outside world much easier because you’ve now got an army of people representing the business, not just a select few.

Seize the PR Opportunity

If you’ve taken the time to explore the longer term vision and plan for your business, even when it feels as if everything is collapsing in on you it will be clear that there is an opportunity to communicate this vision as the reason for the restructure.

You have the chance to change your business and how it is perceived by your clients, competitors, suppliers and employees and, indeed, by you—and all for the better. By telling your story, including your renewed vision for your business, you can eliminate rumours and quell the doubts lingering in the minds of your staff and clients. 

Redefining Your Business

Going through a business turnaround and restructure process is your chance to take advantage of the market from a much stronger position than you had before. However, you must redefine how you conduct your business and what your business does from now on. It’s said that the best way to learn is actually to teach, you must know your material in order to teach.

One of the best ways in business to instigate change is to lead from the front and communicate to the outside world how you want your new business to look and be perceived by your clients, suppliers and employees. 

Marketing Material Preparation

The marketing collateral you prepare is a very important part of the process of communicating your new business, products and services to all concerned and must be planned-for accordingly. You’re going to need to ensure you have a way of printing and delivering this new marketing material ahead of entering a restructuring process and having a pre-arranged payment deal to pay for thus material is critical to prevent you from having any downtime with your campaigns when you can least afford it.

Business Intelligence

Before entering new markets, whether locally or internationally, you should learn about your target markets. The business intelligence you will generate from this market research will be invaluable.  Obtaining as much structured information so you can in order to plan your campaign thoroughly before expending time and money will give you the best chance of success. The initial market research should identify:

  • Potential buyers

  • Competitors

  • Industry associations

  • Agents and intermediaries

Your Communications

You need to focus on maintaining a healthy business and one of the keys to this is ensuring that communication internally and externally is regular, timely and meaningful, conveying some value to the client. Make sure you actually deliver the communication when you said you would. If you say you’re going to send out a newsletter every month, you’d better do it.

The client expects it. The benefit of maintaining consistent communication is that it builds trust. Subconsciously, your client will begin to view your company as reliable and consistent. They will recognise that you have something to say and contribute, and will keep you in the forefront of their minds for any upcoming projects or opportunities.

Continuity – Encourage Repeat Business

It costs more to attract a new customer than to keep an existing one, while repeat business means attracting more revenue based on the original marketing and new business budget. The best way to ensure you have repeat business is to continually and consistently communicate with your existing clients and customers.

You must continue to give your existing network value, even when they aren’t paying for it directly. Don’t reserve your free offers or your speculative work just for attracting new customers and clients. Strive to keep updated with your clients concerns and issues.

Don’t leave it to them to tell you exactly what their problems are or may be, dig into their business and uncover future problems for them and let them know that you are equipped and have the experience to solve them. 

Dealing with the Press

The best thing to do with the press is to get them on your side! A friendly journalist can be a lifesaver as you finish your restructure and step into a more profitable future. Just be careful because they will probably want more detail than you’re willing to give.

Of course, if you think you don’t have a story or an angle that might be interesting to the press, then review the changes you’ve made over the last few months during your restructure. How you’ve adapted and changed is a story in itself.

In difficult market conditions, stories of how businesses have adapted to new scenarios are of great interest to the press because they attract readers with useful and timely information and expose them to advertising.

Your PR and Marketing Campaign

The key to any marketing and new business campaign is having a good plan, implementing it, measuring it, improving and refining it and rolling the new version out again. This process is summed up in the acronym AIDA(S), which is used in marketing to describe a common list of events that are very often undergone when a person is selling a product or service:

A – Attention
Attract the attention of the customer. 

I – Interest
Raise customer interest by focusing on and demonstrating advantages and benefits, rather than features, as in traditional advertising).

D – Desire
Convince customers that they desire the product or service and that it will satisfy their needs. 

A – Action
Lead customers towards taking action and/or purchasing. 

S – Satisfaction
Satisfy the customer so they become a repeat customer and give referrals to a product. 

How your Business's Clients help you save, turnaround, and grow your struggling professional client service consultancy, design, marcomm, PR, digital or creative agency business (checklist).

 Save Turnaround Grow Your Struggling Consultancy Practice Studio Agency Business Clients

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.

Click to listen to the audio or read the full transcript below and sign up for my Creative Core newsletter and I'll send you a quick-start business turnaround email course complete with 96 point action checklist and business turnaround strategies you can start using today.

Total Business Turnaround
Part 09 | Working With Clients

Without clients or customers, you don’t have a business. It is as simple as that. Keeping your customers happy and coming back is key to your success. A disgruntled client is like having five clients who will never give you any work, projects or sales.

Never give a client reason to let their network know you’ve let them down. With less active clients around than in more buoyant times, your reputation is more critical to your survival and success than ever before. 

Clients and Their Effect on Continuity

Your existing clients, those with live projects or sales about to confirm, are your most crucial ones. They are not only the answer to your immediate cash flow issues, but will ensure you can take care of things in the coming months while you regain your footing.

Depending on how your restructuring process was carried out, and how quietly it was done, your clients may not even be aware that you have been having problems.

Whether they do or not, at the appropriate time it may be a good idea to give them at least an overview of what’s been going on. If you or your team has a strong relationship with your clients, then they will be supportive and trust that you’ll continue to do good work and provide them with excellent products and services. 

Copyright Issues

Upon hearing that you’ve restructured, your clients will be concerned over the copyrights of the work they have procured from you. They will be worried that they may not have the right to use the work or will they have to pay again. They will also worry about the copyright of any supporting material used within the product or service they have purchased.

Have an email or letter ready to be issued once you’ve instigated any restructuring process to show your clients that you are fully aware of their concerns and that you are proactively dealing with those issues. 

Ownership and Outstanding Invoices

If you’ve restructured through a liquidation, you clients will want to be certain that if they pay an outstanding invoice to the company in liquidation, they will own the product that they have paid for. In some instances, the client will argue that they don’t have to pay the outstanding invoice because the company is in liquidation.

Issue the invoice along with some kind of communication that proves the new company has purchased the old business assets, including the outstanding invoices in the debtor book. 

Rumour Control

You need to do your best to head off rumours before they get any traction and quash those that are making the rounds. Understand that your management, your staff, your creditors, suppliers, and your clients will experience or spread the rumours about you and your business, either knowingly or otherwise and while your clients may not pay attention to the rumours, it’s better to be certain and contact them directly.

Communicate your situation and reassure them that everything is moving forward despite the issues you are facing.

Building and Maintaining Trust

If your clients trust you, they will generally be more loyal and more likely to help you through this process, especially if they are aware of the difficulties you are facing. You need to maintain trust through communication. If your client is unsure about what’s going on with your business, and uncertain of your abilities and focus, they will most likely not trust you or your team to deliver their project. In that case, they will begin to look for some other provider they can trust, which will just make things more difficult for you. 

Trust is built through continuity. By continually offering great products and services in the past, by continually putting your clients first, you built up their trust in the past. You need to maintain and build-up that trust by reminding them of having been a great business in the past, and reassuring them that you continue to offer the same level of service, quality and creativity they have come to expect. Let them in on some of the details about how you intend to maintain and improve the standards your business adheres to.

Client Loyalty

If you have worked hard to develop solid, long-term relationships with your clients, they should be loyal to you. In many cases, this has been sorely tested by the economic problems we are currently facing, especially in the retail sector with customers doing everything they can to find the lowest prices, but for most professional relationships it still holds true.

It is up to you to be in your clients minds just enough so you’re the first company they think of when it comes time to show their loyalty, and that means you must make satisfying their needs—as much as you would any partner or vendor—your top priority. 

Make Your Deliverables

The primary concern of your clients, assuming that they are still willing to buy from you now that you are going through the restructuring process, is your ability to deliver as promised. This is especially true if it is a longer term project as there’s more of a chance of you going under if times are hard. If it’s a quick hit project and you have a good relationship they may not be as concerned, but they will be wary.

It’s up to you and your team to ensure that your clients are happy with progress you are making on their work and that your team is able to deliver. It can’t be the client’s problem or inconvenience that you can’t deliver for any reason. 

Quality and Price

The worse a market is, the more competitive it becomes until only a few are left standing. In order for you to be one of the ones left standing, you have to make some strategic decisions regarding price and quality to make sure that can happen. Especially examine market expectations and demand before you make any decisions.

How your Business Creditors help you save, turnaround, and grow your struggling professional client service consultancy, design, marcomm, PR, digital or creative agency business (checklist).

 Save Turnaround Grow Your Struggling Consultancy Practice Studio Agency Business Creditors

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.

Click to listen to the audio or read the full transcript below and sign up for my Creative Core newsletter and I'll send you a quick-start business turnaround email course complete with 96 point action checklist and business turnaround strategies you can start using today.

Total Business Turnaround
Part 08 | Business Creditors

Your creditors, on the whole, are really the suppliers who have helped you grow your business. Without them, you would have nothing to make or sell. No product, no income—nothing. They helped you when you first got started and have been there for you throughout. Therefore, you should do everything you can to return the favour and ensure that they are well looked after and treated at all times with the respect and professionalism they deserve.

Business Continuity

You must maintain your integrity, honesty, openness, and you must recognise your obligations and make good on your debts wherever possible. In extreme circumstances, especially when the future of your business is in the balance, you should look at everyone associated with your business as suppliers and creditors, and for your business to survive; you have to look after them all. You can’t focus on one to the detriment to the other; otherwise your business will quickly start to fall apart.

Statutory Creditors

The main creditor you will have, and in the UK probably the main reason why you may have had to reach the decision to liquidate your company, is the government; especially if they are pressuring you to pay overdue monies owed for VAT and the Employee Tax. Because of the length of time that it takes for communication to pass down the ranks within government agencies, they can always come in and demand monies owed. However, once you have gone into liquidation or administration, it is the responsibility of the insolvency practitioner to handle any enquiries from the tax collectors.

You as Creditor

You will probably have to forgo any money you’ve invested in the form of personal loans or through credit cards. If you must get paid back, the best you will be able to do is to pay yourself only the absolute minimum to help ensure the continuity of the firm. You may receive a dividend from the insolvency practitioner, but that is dependent on the amount of funds you have invested as directors loans.

That dividend, however, will not be enough to pay the regular day-to-day bills of your credit cards and personal loans. Moreover, if you do receive anything, you won’t receive it for about 24 months, or until you’re new company has fully paid for the old business. You may have to consider personal debt management to make it through.

Problem Creditors

There are many creditors who will, more or less, work with you. There are others, unfortunately, who will more likely cause trouble. This will happen through unprofessional behaviour, rumours, and bad mouthing. The best way to deal with these issues, not to mention the creditors behind them, is to communicate as openly and fully as you can.

Responsibility and Understanding

It’s good practice to always keep the other person’s situation in mind and to be as understanding as you can. Remember that to a greater or lesser degree, everything that is happening to you and your business has an impact on everyone connected. You must remain professional and helpful. You are part of the reason you and the creditor are in this situation, but so is he.

Be as honest and helpful as you can, since by doing your best to resolve the situation, they will respect that once they’ve had a chance to vent and feel heard by you.

Repayment Schedules – Preferred Creditors 

You’re not meant to give any creditor preferential status, but there are business-critical suppliers and creditors that must be paid for you to continue working. Prioritise as best you can, but in the short-term you should only pay business-critical creditors and suppliers to ensure continuity and keep them on a realistic payment schedule so that your month-to-month cash flow and payments are kept to an absolute minimum. 

Repayment Schedules – Other Considerations

On the whole, it’s best to keep any agreement to repay ongoing business-critical suppliers on a gentlemen’s basis. In other words, try to leave it at a handshake.

Any commitment above that at this stage will simply put you under stress while you are trying to get the business going again.

As long as your intention is to make good the relationship, and you keep in regular and professional contact, then you’re doing your best and doing the right thing. So many others wouldn’t go this far and your creditors will, for the most part, respect this even if they are upset that they aren’t getting paid straight away.

Software Licenses and Copyright Issues

When it comes to software license agreements that are not carrying over, things can become very complex. Check the terms and conditions as you may have to re-buy certain items you thought you’d bought and had value in the purchase consideration for the old company.

Some software license agreements restrict the license transfer to restructured companies. Often, these companies will invoke their terms and conditions and insist that you purchase new licenses.

Photographers and other suppliers who hold the copyright of their work will keep a tight hold on the  copyright until they’ve been paid and that can lead to client issues. They may even contact your clients directly and demand payment, as they may ultimately be the end user of the copyrighted material. Deal with these suppliers in as timely a way as possible.

How your Staff Team help you save, turnaround, and grow your struggling professional client service consultancy, design, marcomm, PR, digital or creative agency business (checklist).

 Save Turnaround Grow Your Struggling Consultancy Practice Studio Agency Business Staff Employees

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.

Click to listen to the audio or read the full transcript below and sign up for my Creative Core newsletter and I'll send you a quick-start business turnaround email course complete with 96 point action checklist and business turnaround strategies you can start using today.

Total Business Turnaround
Part 07 | Staff Team

Negativity can spread quickly among any group of employees; and although some people will always find fault with something and complain and spread rumours, it’s wise to take note of the situation and work to keep your business environment, systems, and staff development programs organised and always improving.

You must ensure that your communication is timely and focused and that your employees have a way to communicate their concerns to you. More than that, they have to know that when they do step forward, they are taken seriously and that action is taken if appropriate. Without your employees, you have no business, so treat them right!

Leadership and Motivation

Leadership is about far more than simply being in charge. That is simply being a boss and that won't go very far if you are trying to restructure your business. Leadership is about showing the way and facilitating everyone's journey so that everyone in the company makes it to the same end point at the same time. It means being true to the big picture vision while keeping an eye on the details and giving your people the tools they need to get you there. It means delegating responsibilities and trusting the people you select to do their jobs.

A leader's mood and behaviour impact on how group members think and act, a fact that is directly tied-in to how effectively the group works. Leaders issue verbal and written instructions, yes, but they also transmit their goals, intentions, and attitudes through their emotional expressions, and that cannot be ignored. The group members respond to this cognitively and behaviourally, and that response is reflected in the way the group works. 

A and B Type Employees

You are in business to earn profits and to grow your business. To be on this journey, you need the right kind of employees, but how do you know who and what you really have? You can divide your employees up into four different types: A,B,C, and D. The difference between them comes down to talent, reliability, and performance. A-Type employees are talented and they perform to expectations, at the very least.

Fakers make all the right noises and appear to be taking all the right actions, but their motives and methods are questionable, to say the least. B-Type employees deliver satisfactory performance, even though they lack in ability. All it really takes is a little investment in their development to turn them into A-Types.

C and D Type Employees

If the A- and B-Type employees are at the top of the heap, the C- and D-Type employees are at the bottom and they each present challenges of their own. C-Type employees are unsatisfactory in their work performance, failing to deliver the results expected of them. They are also lacking in ability, work knowledge, skills and values.

D-Type employees are talented, but they are not contributing or delivering and you need to find out why since many D-Type employees have left one Company to join another only to become A-Types. If you can answer the question you can help them evolve into A-Type employees that can be of immense value to your business. 

Employee Concerns

You should be aware of the many likely concerns that your employees will have once they become aware that the business is struggling financially. Threats to their integrity, their job, their pay-check and more all contribute to the worries of your employees. You need to communicate with your people and reassure them in order to keep these concerns in check. 

Employee Tolerance for Problems

Some employees have a high tolerance for problems – mainly because they are older and more experience, but the majority will not. Therefore, it’s advisable to be mindful of this when communicating change within your organisation. The important thing to remember throughout this process is that regardless of how hard it is for you, your employees are feeling it as well.

Their career paths have been very different – no doubt focused on specific tasks and responsibilities – so they are not exposed to the emotional ups and downs associated with a struggling business and the impact that it will have on them.

Dealing with Rumours

In times of intense difficulty, the last thing you want to deal with is an issue like rumours within your organisation. Unfortunately, when business is difficult it’s very likely that rumours will abound, especially if you and your management team are tied up with sorting out the problems and trying to get the business on track.

It’s best to try and spend as little time as possible determining what they are so you can spend your time putting them to rest by communicating regularly with your management and employees so they never grow bigger than murmurs that are quickly and quietly dispelled.

Regular and informative, yet reassuring communication should serve to eliminate rumours. Generally D- and some C-Type employees will propagate rumours with others following suit soon after, depending on seniority.

Communication with Your Employees

You need to communicate with your management team, your IP, the bank, your sales finance company, your solicitors and, just as importantly, with your staff. Depending on the size of your business, you could do it one-on-one, as a team or a department, or to the entire organisation.

Just remember if you choose to speak with individuals or teams, that as soon as the first few people have left the meeting, everyone else is up to speed on what they think is going on as opposed to what’s actually going on, so depending on what you want to say, it may be better to communicate to the team or company as a whole. 

TUPE in Practice

The purpose of TUPE is to protect employees if the business in which they are employed changes hands. Unless employees have been part of a larger corporation that frequently changes hands they are likely to be unaware of TUPE and therefore seek some assurances with respect to working for the new company and some guarantees that any money owed to them from the old company is paid to them.

Once you’ve completed the purchase, you must send a letter letting all employees know the obligations and responsibilities to them under law have now been undertaken by the new company. To put their mind at rest, you can let staff know before completing the purchase that this letter is going to be issued once the company purchase has gone through.

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Total Business Turnaround
Part 06 | Legal Issues

Like finance, it is important for you to have some grounding in legalities of your business and industry and the regulatory environment in which you operate. We will look at legal frameworks, contracts, key laws and regulations related to your business and its continuity. We will also examine your obligations as an employer, a director, and as an individual. This is not an exhaustive summary, nor should it be taken as legal advice. 

This is simply an overview of the legal issues that affected our business throughout our restructuring, offered as a guide to get you started. This summary is from a British business practitioner's perspective and though the principles discussed will apply almost anywhere, nothing here should be taken as actionable advice in any way. You are strongly advised to seek your own legal advice throughout any restructuring process. 

The Insolvency Practitioner Process

From the moment you officially go into liquidation or administration, you will be operating under license for a period of 2 to 3 weeks until the appointment of the insolvency practitioner. You will be required to sign an agreement prepared by your IP to legally operate the assets of your business and trade under the same name. With this agreement you are effectively licensed to operate you old business until the IP is appointed and the purchase agreement for the business is completed. 

A Statement of Affairs will be summarised and compiled by your IP using all of the accounting information you have available. This statement will outline how much you owe your creditors and discuss why you are insolvent. You need to be prepared to write a one page summary statement that outlines details of the immediate 12 – 24 months leading up to your current insolvent position. 

Purchase Agreements

As part of your restructuring, you will have to buy back your business under a purchase agreement. When you are working out a purchase of this sort, it is not uncommon to pay 75% of the value of most items. The rest are marked at book value while goodwill and obligations met are up for negotiation.

As we mentioned earlier, because you’re going to be paying for it over the next 12-24 months, it is always in your interest to argue—and prove your case—for a lower valuation of the business. Plan your negotiations carefully and don't leave them until the last minute. Doing so will probably keep you from getting the best price. See the Team Section for an outline of the valuation process.

TUPE – Transfer of Undertakings (Protection of Employment)

The purpose of TUPE – Transfer of Undertakings (Protection of Employment) – regulations is to protect employees if the business by which they are employed changes hands. Its effect is to move employees, and any liabilities associated with them, from the old employer to the new employer. TUPE applies every day to an enormous number of different business transactions and it is essential that employers of all sizes understand what employment liabilities can arise from its action. 

S216 and the Reuse of Your Company Name

Section 216 of the Insolvency Act of 1986 restricts a phoenix company or a successor business from using a similar name or trading style to that of an insolvent company undergoing liquidation. This applies if the directors from the previous business are involved in the management of the successor company in any way, even if they acting as shadow directors. That is not to say it is impossible for you to use your old company name, you just need to carefully follow the law.

Rent and Landlords

One of the major issues you will face during your restructuring will be what to do about the physical place where you conduct your business. Along with the insolvency practitioner, your creditors and your clients, you have a landlord to deal with. Some of the things you will need to consider include discontinuing your lease, dealing with the managing agent, lease assignments, repayment plans, deposits and the possibility of having to relocate.

Leases and Licenses

On the whole, lease and license payments are fixed monthly expenses and regardless of whether you are restructuring your business or not, its beneficial to try and reduce your payments or remove them from your monthly obligations all together. This includes rental and lease finance agreements, software licenses, equipment redundancy, personal guarantees and, as always, communications.

Liquidity and Insolvency

Liquidity translates into cash, either cash on hand or in assets that can be quickly and easily converted into cash. Unless you have employees who work for filched office supplies, they are going to want cash. The same goes for your suppliers, your creditors, your solicitor, your bank—essentially everyone involved with your business and the restructure. To ensure you do not fall into insolvency,  you must pay particular attention to the following:

  • Issue invoices and chase payments promptly and regularly.

  • Reduce your overhead and expenses aggressively.

  • Seek the maximum percentage draw-down achievable with your Sales Financing Company. You don’t have to always draw-down the maximum but having the facility available can ease your cash flow when things gets tight.

  • Ensure that all documentation is in place so invoice payments are not unnecessarily delayed, disputed, ignored or cancelled.

  • Do not use suppliers and creditors unless they are absolutely critical to your business.

  • Ensure that you have up-to-the minute management account information so you can be sure of where you stand vis-a-vis your solvency.

  • Negotiate and try to reach an agreement with your suppliers and creditors if you foresee a difficult period coming.

  • Give notice of reduced working weeks to staff.

  • Try to negotiate discounts and payment reductions on your leases and rent payments.

  • Attempt to obtain payment holidays from all of your creditors.

Continuity Planning

This means the continuation of your business from a clerical perspective. Involving payments that must be maintained throughout the process, otherwise key benefits will be lost and that will impact staff morale, cash flow and business continuity. These key areas can either be transferred or renewed with new companies at more competitive rates, but you must ensure that any benefits accrued are taken on by any new supplier. These include insurance, medical coverage, and pension contributions.

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Total Business Turnaround
Part 05 | Business Finance

As a leader of your business, you need to be versed in at least the basics of finance, record keeping and basic reporting. It would help you if you went beyond these, but any practical financial knowledge will be useful. If you simply don’t have the time or the inclination to learn about finance, you’d better make sure you’ve got someone you trust who is qualified and understands finance to lead that aspect of your business.

However, you must not simply abdicate your authority. This is an opportunity for you to delegate authority and monitor performance. You need to stay on top this, whether you know anything about finance or not. 

Maintaining Cash Flow

We have already discussed how you can keep the cash flowing by billing promptly, avoiding over-trading, trimming your inventory and other other methods. Now we are going to go over a few other cash flow issues, like cross over, the dangers of the transition period, draw down availability, purchased debt and other issues you may need to deal with during your restructuring.

Issuing Invoices

Getting paid means sending out invoices, but what is the best way to go about it? It is more than just printing up a bill and popping it in the mail. You need to understand that invoicing is a multi-stage process, the importance of building relationships, money fears, sales financing and other issues.

Chasing Invoices

There are no hard and fast rules for chasing invoices, but once you’ve delivered your product or service to your client's satisfaction, it all comes down to ensuring the correct information is placed on the invoice, getting it into the hands of the right people and polite, efficient and consistent communication with the relevant people and departments until you either get paid or have to take legal action.

Credit Cards and Expenses

If you can’t show strong accounts and positive cash flow it’s unlikely that the business’s new bank will provide you with a simple debit card let alone a credit card of any form even with a low credit limit for at least 6 months. This is incredibly inconvenient especially when unexpected and minor expense items crop up during the transition when cash flow is at its most restricted.

You’re only options are to pay cash, write checks, have staff pay and reclaim on expenses, don’t pay, or use your own personal credit cards. Clearly not making the purchase is the preferred option, but some of these expenses will be legitimate operational expenses and can’t be avoided. You must be sure that you will be able to cover the expenses at the end of the month with salaries.

Dealing with Suppliers

Suppliers form a major part of your organisation. Without them, it’s highly unlikely that you would be able to deliver your products or services. In fact, without your suppliers you would have no business. It’s best to establish a deal mentality, one where you are dealing and negotiating to try and arrive at a win-win solution to both parties.

You need to work towards loyalty and it is important to be honest and return favours where and when you can. If your suppliers are no longer able to help you through difficult times, then you tried and must move on to find new suppliers. Business is business, but you must maintain integrity, honesty, openness, and make good on your debts with your suppliers if that’s how the relationship is ending.

Handling Creditors

The other side of the coin is your creditors. How you manage those you owe money to is every bit as important to the success of your business endeavours as how you manage those who owe money to you. Here are some suggestions:

  • Stop spending

  • Offer controlled repayment

  • Reserve account

  • You as creditor

Personal Guarantees

Throughout the early years of your business, when you getting it established, you will be required to sign personal guarantees to secure financing for your business in the form of loans, leases, purchases, and financing facilities. When going over your personal guarantees, you will have to consider a number of issue including bank overdrafts, business loans, defaults and late payments, sales financing and company purchase agreements.

Director Loans

Depending on your personal financial position, you may have funded your business with personal loans and credit cards and these may still be outstanding. This can cause considerable cash flow problems for you personally if your business is in trouble and going through a restructuring process. Make sure you stay on top of your credit reports and keep your cash flow positive.

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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.

Accounting Professionals

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.

The Surveyor

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.

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Total Business Turnaround
Part 03 | Simplification

What does it mean when something is simple? In this case it means doing away with anything that is not essential to the function of your business. You need to question everything in your business. Every system, every role, every responsibility—including that of the CEO—needs to be questioned and examined thoroughly and those things that are not necessary need to go.

Simplification is rarely easy or nice, but you must always keep your business objectives in mind and be as direct and honest as you can. If it's done quickly and openly, a fresher, more capable, more nimble business will emerge at the other side, ready to take on the new challenges it will face as it moves from survival to success.

Pricing Issues

How you price your products and services has a great effect on your ability to thrive as a business. Too high and you are pricing yourself out of the market. Too low and you will be unable to sustain yourself. Finding the right point, though, can be difficult. However, you should not leave it entirely to chance. You must do a little research into your market, your industry, your costs, different pricing strategies and tactics—everything that goes into pricing your products.

Overhead Reduction

Another way to boost your profits is to cut your overhead. This is a time to figure out what you really need and what you can do without; what you have to spend full price for and what you can get at a discount. 

Rent Issues

If you are not doing business out of your garage, or your car or a pay phone, odds are you are paying rent; and depending on your location, you could be paying a hefty sum to the landlord each month. There are a number of things you can do to make that rent a bit more palatable, such as negotiating a reduction in rent, paying monthly, renting desk space, and relocation.

Lowering Staff Costs

As oppressive as it may sound, continual monitoring, reviews, and reporting on staff productivity is essential for the health and development of your business. It is also a necessary thing for the health and growth of your employees, though few are likely to see it that way. Some other things you can do to lower your staff-related costs include eliminating redundancy, instituting a program of forced holiday leave or a shortened work week. 

Maintaining Cash Flow

Cash is the lifeblood of your business and it has to flow. You can keep the cash flowing, however, if you bill promptly, avoid overtrading, recover debts, trim inventory, renegotiate your credit limits, approach your bank, consider factoring or sell some assets.

Charges, Fees, and Other Expenses

During a restructuring process you will be required to provide a number of  documents dealing with expenses. If you haven’t got them to hand, or can’t get hold of them easily, take action immediately to get hold of copies where you can. The absence of these documents can make things take much longer than necessary and throw up some surprises if you’re not prepared.

Restructuring Options

You must determine what is best for the business and your creditors because quite simply you are currently funding your business with their money and you’re doing it, quite probably, without their consent. In that situation, your only real options are trade and repay, loans, investment, extracting your business and restructuring, or administration and liquidation. 

The Restructuring Process – Program and Costs

It is hard to say what this whole process of restructuring will cost. It really all depends on the specifics of your case. However, there are a number of things you can count on having to deal with – costs, goodwill, time and effort, the program itself, incorporation, banking and VAT issues, and business financing.