Sooner or later, undesirable developments in a company become apparent in its earnings situation. Once there, it is usually only a matter of time before the company’s liquidity is also affected. So, if there are negative deviations in sales and/or earnings compared to corporate planning, if the results are below those of comparable companies or even negative, it is imperative to take countermeasures. Precisely because time is usually of the essence in such cases, it is crucial to proceed thoroughly and professionally.

At the outset, the focus is on two aspects: What immediate measures need to be taken to stabilize the company’s situation and how can the causes of the crisis be eliminated in the long term? For both aspects, transparency in the economic situation is an absolute prerequisite. The type and scope of immediate measures naturally depend on the crisis status. Eliminating the causes is the central task in this situation. This requires a professional analysis of the crisis causes, which must not leave out any areas in the company – from the business model to the production and service portfolio, costing, production and cost structures to – everything that is required in the process-related consideration of the company. The adequate toolbox, experienced guidance and the willingness to reflect and question oneself ensure the success of this step.

Avoiding Repetition

The result of the analysis demands the first essential decision – can and should the causes of the imbalance be eliminated and can this be done in an adequate time frame. If this is not the case, questions must be asked about the possible and reasonable alternatives for action. In the area of tension between the time available, the legal requirements for companies in crisis and financial viability, the fundamental decisions for the next steps must be made.

We assume in this article that the elimination of the causes and thus the weak points should and can take place. Here, too, the right toolbox and the methods appropriate to the situation are required. The tools and methods are as diverse as the possible causes of crises. The central point in eliminating the causes is to largely exclude a possible recurrence. At the very least, it is advisable to sharpen – or in many companies to introduce for the first time – the early warning system and risk management, and to create transparency about economic developments.

In many crisis situations, the causes are eliminated and a “few things” are changed. This leads to short-term success. However, the goal of a restructuring should be to make the company more robust, resilient and crisis resistant. For this, the criteria for robustness, resilience and crisis stability of the company must be defined. Depending on the business model, the systematic further developments of the business model itself and of all corporate divisions must be adapted to the defined criteria. From the business case and the product and service portfolio to processes, procedures, market development and human resources policy, all aspects must be focused on. Defined processes within the framework of a management system help in the implementation and in the achievement of the resilience criteria.

THE MAK`ED TEAM continuously advises and accompanies national and international companies in the elimination of difficulties, in reorganizations and restructurings. With our high level of expertise and our interdisciplinary team, we know which tools and methods to use to bring our clients efficiently and successfully to the goal of a stable turnaround.

More about Crisis, Turnaround and Restructuring.