Crisis Management

When a business finds itself in financial difficulty, whether it is a limited company, a partnership or a sole trader, it is often difficult for the principals to take an objective view to enable them to establish the real causes of the problem. This is not because they are bad managers. The fact of the matter is that often a current problem is the result of a stimulus that occurred several months earlier. This leaves managers in a position where they need to react to the result of the stimulus and have little time to dwell on its cause.

The greatest difficulty for business advisers is they are often involved at a stage when the problem has taken such a grip on the business that a remedy is more difficult to implement and on occasions it is too late. Many people in business are not aware of where they can go to seek appropriate advice and even those who do are often reluctant to admit they need help. In business, problems that are either ignored or inadequately dealt with often result in the irreversible onset of insolvency.

It is certainly not advocated that a business manager should contact a business adviser every time there is a blip in the cashflow or profitability. Almost every business suffers from occasional drops in performance that are soon overcome.

The time to become concerned and seek outside help is when a blip becomes a trend because trends can develop into terminators. If things have been tight for two months and there is no firm indication of an early improvement, that is an unwelcome trend. At these times the Micawber philosophy has to be put to one side. Things do not simply turn up. Positive action has to be taken to improve the situation.

A competent business advisor will be able to identify the cause of an adverse trend and, working with you, will develop and implement a workable strategy to reverse it. Even in cases where insolvency is unavoidable, much can be done to successfully manage the process so that all stakeholders benefit.