Telford is the hub of Midlands Trade and Industry, with a significant number of foreign investors and well established British firms making their name there for manufacturing quality goods or for ICT support related industries. The factories on the three main industrial estates employ tens of thousands of workers and provide the main source of income for most Telford families.
However, despite on the surface Telford’s apparent success as a Midlands area player in industry, bosses at one of the major factories has recently announced phased redundancy plans, in which they aim to cut down by fifty staff every quarter. This is one of the ways factory bosses can expect to achieve business turnaround and avoid liquidation.
It is often very difficult to make such decisions and Managing Directors and their boards should not attempt such measures, unless adequately advised by a business recovery specialist. Such companies guide boards in executing cost effective measures in order to prevent winding up a company.
Part of the role of business recovery agents is to make sure a company is running at its most efficient. For example are their stocks or assets which can be sold off to reinvest money back into the firm or settle debts with investors? Are the management teams and HR deploying the work force effectively or are the an excess in staffing? Is the company ‘working smart’ or are their ways that productivity could be increased and waste decreased? Can manufacturing processes be augmented to be run by less workers for more profit? Soon it is very easy to see one area where winding up a company can be avoided and unfortunately it is by making redundancies.
The threat of redundancy can have two possible effects on the morale of the workforce. It can make a work force work harder to prove there are essential to the business turnaround and therefore hopefully be kept on when there is a raft of redundancies. Or it can have a detrimental effect on the worker leading to an inefficiency in output and push a board of directors closer to winding up a company.
In order to achieve business turnaround with everyone in the company on board it is essential to acquire the services of a business recovery specialist, who will have handled such situations before and can smooth over such transitions with your workforce. Sometimes once you have been looking at the distinct possibility of winding up a company due to a financial crisis within your firm, a fresh pair of eyes is what is needed to advise you and ensure success. As harsh as it sounds employment is one of the most expensive bills a company has to foot on a monthly basis.
The hardest part of planning and executing a business turnaround is to admit your business is failing and begin to make quite drastic but essential money saving plans. Steps towards avoiding winding up a company may include: taking control of cash flow; having the right team in place; changing business propositions; reduce overheads, cutting waste, and to avoid buying things you do not need; turnaround finance which is planned out meticulously; and to ensure that you communicate effectively with your shareholders at every step.
Mark Jefferson is a seasoned commercial finance professional with over 25 years’ experience in financial services, much of that spent providing funding to SMEs. Mark has worked with many other firms in a similar situation to yours. Call Mark on 0800 157 7355 and you can also follow him on Google+
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