If a company is facing financial difficulty yet the directors accept the need for change and appropriate funding can be found, there are a number of business turnaround options available that could give you the chance to rescue your business. From well-constructed business recovery plans that enable companies to improve cash flow and trade out of insolvency to legally binding procedures such as a company voluntary arrangement, you might be surprised about the number of different business turnaround solutions available.
Business recovery plan
A business recovery plan can often clear the air and give a company a new focus. Your business recovery plans should accurately reflect the current standing of your company and also consider important legal areas such as tax savings – which is why it is often sensible to enlist the services of a licensed insolvency practitioner.
If your business is struggling and you haven’t yet created a business recovery plan, there might still be time to do so. At McAlister & Co, we will examine every aspect of your business and help you find ways to cut costs and take advantage of insolvency laws in order to implement a fast and effective action plan. Find out more here.
What to include in your business recovery plan
Your business recovery plan should identify the most important and essential areas of your business, such as:
- The most basic departments you need to keep your company running
- Key documents and other items needed to operate in the short term
- The equipment needed to operate in the short term, such as software, hardware, business equipment and spare parts
- The creation of a basic operating budget detailing all expenses
- The minimum financing you need to keep your business running
- Who is responsible for each area should disaster strike
A business recovery plan is, in most cases, an opportunity to start again. Having assessed your business’s weaknesses and the potential for change, your business recovery plan can help you to change management strategies, approach problems from a new angle, alter the ways in which goods and services are provided, or just generally refresh your business and renew interest.
Company voluntary arrangement
In instances where severe financial problems exist, there are powerful legal ways to ring-fence a business whilst a solution is found – one of which is a company voluntary arrangement. If your company has a viable future, a CVA can enable you to avoid liquidation and instead focus on paying creditors what you can afford out of future profits.
A company voluntary arrangement is a formal arrangement between a company and its creditors. The arrangement highlights that whilst at present the company cannot pay its debts, it will be able to in the future. The business will then pay towards its debts for an agreed period of time, and once completed, all remaining debts are written off. Find out more here.
Vital components of a CVA
In order for a CVA to be successful, the following components are absolutely necessary:
- A viable business that can return to profitability
- Commercially structured and can succeed without over-promising
- The introduction of appropriate levels of working capital
- Restructuring the debt
- The management team must accept that change is necessary
- Determination and hard work throughout the CVA period
- Cautious forecasting
It’s important to remember that a CVA is not a panacea for your company, but it is a very powerful framework for change and protection. One approved, the CVA should aim to maximise creditors’ interests, preserve economic activity, save jobs, return value to the creditors and provide the prospect of a return for shareholders.
Next steps
If your business is facing financial difficulty yet you believe it can still be saved, it’s important to seek expert advice as soon as possible. The sooner your act, the more options you have available, so contact McAlister & Co today for friendly, practical advice. At McAlister & Co we are business turnaround experts and have years of experience helping distressed companies rescue their businesses, so you can count on us to find the best solution for you.
Remember that you don’t have to face financial difficulty alone. We don’t even need any personal details to answer initial questions on your situation, so call our friendly team today on 03300 563 600 for free confidential advice.
