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What Advisors Can I rely on if my Business is Financially Challenged ?

Guest post by: Stan Prokop

Article Overview: The article highlights the business owners needs in selecting proper advisors when implenting a financial or business turnaround .

What Advisors Can I rely on if my Business is Financially Challenged ?

When a business is in trouble the owners or partners can of course rely on themselves to identify issues and implement solutions . Naturally this type of business challenge truly tests the mettle of all business owners and partners . Equally, or in some ways more important though is the ability to properly identify external advisors that can assist and help save or fix the troubled firm . We can somewhat make the assumption that if the owners were not capable of running the business to avoid such problems that they are perhaps even more in capable of fixing the problems .

In fairness to business owners we clearly recognize that problems affecting a business are both internal and external , with little control often being had on the latter .

Too many business owners rely on their company lawyer to handle any legal issues surrounding the failing business, i.e. creditor negotiations, etc . That is important and necessary, but a key point needs to be made here . That is that not all lawyers have the competence of experience in very narrow areas such as business failure, restructuring, etc.

The same goes for your accountant of course . While he or she may have been capable of preparing the numbers they are not necessarily the ‘ company doctor ‘ when it comes to restructuring and addressing turnaround issues .

Getting back to our lawyer – that person , given your business situation, must have solid experience in turnarounds, restructuring, and creditor negotiation . The true value of lawyers and accountants in such situations is often their network of contacts in banking, financial intermediaries, etc. Naturally the business owner should check references from similar firms the lawyer has assisted . The lawyer must be committed to your project and be comfortable working with creditors, banks, etc.

Business owners will find such professional help in the accounting and legal area from existing contacts , local business directories, or advertisements indicating a specialization in this area.

During time of financial stress or turnaround the accountant has a key role – updated financial reports, particularly cash flow projections are as important as ever. The accountant must be able to position numbers in light of the financial impact of different turnaround strategies . The ‘ what if ‘ scenarios become critical here. A great accountant will of course have valuable input into any turnaround type strategies - they should not just be ‘ running the numbers ‘.

The two other categories of business advisors for troubled firms can generally be summed up as industry experts, and true ‘ turnaround ‘ experts . ( We hesitate to call these turn around experts ‘ vultures ‘ or ‘asset strippers ‘ ) Proper care in this type of expert revolves around ensuring the business owner give them a proper mandate .

There are a number of industry experts in every industry who can add true value to any turnaroud . We need to remember that the largest corporations in the world , with all their talent and bench strength still rely on these experts – so we should consider them also .

In summary, if a business owner has serious financial challenges they should look for proper external help. These advisors need to be qualified , and have a commitment to dealing with the issues . Outside experts can bring the business owner and financial manager the specialized skills needed to save or turnaround any business .

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Article Tags: business turnarounds, financial advisors



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