Sound company with an uncertain future
How do you save a failing company? One family retail company had for years been reporting healthy profits but was suddenly faced with a crisis – it was running out of cash, fast. With the bank threatening to call in the administrators, the majority of the Board were resigned to losing the company.
An alternative plan
But one of the Directors had other ideas. Convinced that the underlying business was still sound, and knowing that there was still a chance to save the failing company, they turned to Finton Doyle for help. Recognising that cash was tied up in overstocked, obsolete products, – hampered by inefficient operations and poor management information – we began working with the company to create an alternative future.
By selling off old stock to generate cash, refinancing a bank overdraft with long-term loans and debt-factoring, the company could solve the immediate cash flow problems.
Then by radically improving management reporting systems, and with a move to smaller, modern premises, the firm was much better able to manage the slimmed-down business.
Information life-support system
We helped by preparing financial forecasts that included all-important cash flow and profit and loss accounts – information is the lifeblood of all good decision-making. We also identified factoring as a solution to bridge the funding gap opened up by the bank, sourcing potential factoring companies for the directors to work with. By introducing an HR specialist, we helped to resolve problematic staff issues.
Restored to good health
As a result, the restructured company is once again dynamic and profitable. Crucially, Finton Doyle could help because we were involved in early, critical decision-making, and not simply to record its demise or administration. Our philosophy is that businesses are as much about people as figures; informed action and TLC can be more important than sterile account keeping.
Key actions
1. Identified issues with overstocking and poor management information
2. Improved management reporting systems
3. Identified key third party professionals
Key results
1. Improved short and medium-term cash flow
2. Management better able to plan and control the business
3. Much improved financial results and renewed optimism for the future
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