Colin Mills, founder and chief executive of the FD Centre, which provides companies with part-time finance directors
“Taking on a business turnround is not for the faint-hearted. If a business has failed or is close to failing, there are reasons for it. Identifying those reasons and being confident you have the skills and resources to make the changes necessary are key to success.

“Generally, there is a requirement to act with speed and rapidly to get a grip on the cash situation. Being very clear on the cash you need to effect the turnround is critical, so sound financial support is a must. Taking on a turnround without the necessary financial support is dumb. Knowledge and experience within a business sector should increase the chances of success and the ability to bolt on a troubled business to an existing one, where you can benefit from gross margins of the failing business without the overheads can work really well. Always do your due diligence and make sure you have done your absolute best to identify any skeletons in the cupboard. In the case of receivership this often has to be done rapidly, so again having access to experienced resources will reduce risk.”

David Glassman, a chief executive coach and chairman of Vistage
Group 57
“When considering taking on a failing business, ask the following questions: Firstly, is it do-able? Then, can I do it?

You also need to assess the downside of doing it. Do this before you consider the upside. Like buses, opportunities tend to arrive in groups of three, and another may be better.

“If the game is worth the candle, before you make the investment, make sure there is a fit with the existing business. Ask yourself whether the team could run it or whether the core team would be required to divert its attention from the main chance. Also, look at the level of the order book and ask yourself whether useful assets can be acquired at a substantial discount.”

“Keep any acquired business separate from the original one until it has proved its viability. Say to those in charge, ‘we want you, as managers, to run your business’ and foster local responsibility with full accountability.

“Decentralise operations and cull any existing group functions such as strategy, marketing, pensions, legal, some of which could be outsourced with advantage.

“Appraise, toughly, investment decisions, particularly in people and on the financial return on capital employed. Consider whether the above thinking could be applied to the core business too and remain open to advice, especially if quantified and from respected sources. Above all, respect your gut: don’t just trust it, obey it. If in doubt, cut it out.”

John Rosling, a business coach at Shirlaws Coaching

“If the owner of the business is still involved, find out why he or she started it and also what it was that it did brilliantly or found easy ‘back in the day’.

“Somewhere in this conversation is likely to be a core, and sometimes forgotten, asset that made the business a success in the first place. The way these assets are currently being utilised is not serving the business. But with new thinking and a bit of creativity new owners can find ways to leverage the assets to create value.

“Understanding these hidden assets should tell you if the business has the beans to rise again and if your skillset is appropriate to reigniting it.”

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