A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
How to Turn Around a Struggling Business
Turning around a struggling business is possible - but it requires honest assessment, decisive action, and often professional help. The earlier you act, the more options you have and the better the likely outcome.
Step 1: Diagnose Honestly
Before you can turn a business around, you need to understand why it's struggling. Common causes include:
- Cash-flow pressure from historic debts or slow-paying customers
- Structural issues - a declining market, uncompetitive pricing, or an unsustainable cost base
- A one-off shock - a lost contract, bad debt, or external event
- Management or operational problems
An honest diagnosis - ideally with an independent adviser - is the foundation of any turnaround.
Step 2: Assess Viability
The critical question is whether the business is viable - can it be profitable and cash-generative if the problems are fixed? If yes, a turnaround is worth pursuing. If no, an orderly closure (a CVL) is usually the responsible route.
Step 3: Stabilise Cash Flow
- Chase outstanding invoices and tighten credit control
- Negotiate with creditors - including HMRC via a Time to Pay arrangement
- Cut non-essential costs and protect the core
- Talk to your bank about short-term facilities
Step 4: Restructure and Refinance
- Renegotiate terms with key suppliers and customers
- Restructure debts - potentially through a CVA, which binds all creditors to a single plan
- Explore refinancing or new funding
- Address operational inefficiencies
Step 5: Use Formal Protection Where Needed
If creditor pressure is acute, administration provides a moratorium - freezing enforcement while a recovery plan is built. This can give a viable business the breathing space it needs.
Step 6: Take Professional Advice
Turnarounds are complex and rarely succeed alone. A licensed insolvency practitioner can diagnose the problem, negotiate with creditors, advise on formal procedures, and help you build a credible recovery plan.
Speak to a Licensed IP
Our Manchester-based practitioners have extensive turnaround experience. We'll assess your business honestly, tell you whether it's viable, and guide you through the recovery - free and confidential.