Establish the actual position
The first requirement is a reconciled view of cash, overdue obligations, available facilities, restricted balances and near-term commitments. Unreliable management accounts must be corrected sufficiently to support decisions.
Separate symptoms from causes
Losses may reflect weak pricing, low utilisation, excessive overhead, financing cost, accounting errors or a structurally unviable activity. Each cause requires a different response.
Test the strategic options
Continuation, operating restructuring, balance-sheet recapitalisation, asset disposal and orderly exit should be assessed on a consistent basis. The financially strongest option may still be infeasible because of legal, political or execution constraints.
Create decision gates
A turnaround plan should identify conditions precedent, accountable owners and decision dates. This prevents management from continuing to fund an option after the assumptions supporting it have failed.
This article provides general information and does not constitute financial, investment, legal or tax advice.