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One definition of corporate turnaround is “The implementation of a set of actions required to save an organisation from business failure and return it to operational normality and financial solvency. Turnaround management usually requires strong leadership and can include corporate restructuring…an investigation of the root causes of failure, and long-term programmes to revitalise the organisation.” 

(Requoted by CIMA from BNET Business Dictionary, 2009)

Where your company is trading at break-even or at a loss but is not yet at risk of insolvency, your board, your shareholders, banks and other interested parties will be working on (or pressing for) the recovery plan.     

In many cases, the company’s financial position, as well as its products, marketplace, competitive position, processes and skills would be fundamentally sound in “normal” economic conditions, but an unexpectedly sharp fall in order intake or increase in costs has left it struggling for cash and unprofitable. Depending on the actual financial position of the company and the reason for the change in circumstances, this could be solvable with a dual-focus turnaround plan – an urgent drive to boost sales and pricing/margin, alongside a hard examination of fixed and variable costs to find savings, including labour requirements and supply chain pressure, as well as waste, quality and general overheads.

Major pandemics and hard exits from local trading blocks make the task even more interesting…

Each situation demands its own agreed approach, but the stages of a full turnaround are broadly the same, with some overlap:

  1. Evaluation – financial position, business outlook, time available, the immediate cause of the downturn. 

  2. Immediate actions to ease cash flow and address cost structure. These are the big impact and obvious targets to begin to get control. 

  3. Restructuring - medium-term strategic re-alignment, core business definition for future growth - turnaround strategy based on one or more of the four ‘R’s: Retrenchment, Repositioning, Replacement or Renewal.

  4. Implementation – with or without new management in key functions. 

  5. Consolidation. If the plan has been successful, the organisation has been through severe upheaval and uncertainty. It is important to mark a point where it can look forward and plan to grow on the new foundations. 


In our experience, there are five principles to bear in mind during a successful turnaround:

  • Early recognition of the scale of the challenges facing the business. 

  • Get help quickly. Depending on the situation, the business may need an objective view during the evaluation and may need outside financial expertise, sales support or operational expertise. Additionally, the CEO/managing director is often well served by having an experienced mentor by his side.

  • Strong leadership from the top - communicating the recovery plan clearly, simply and honestly, conveying and driving a sense of urgency and determination throughout the organisation. 

  • Decisive action in preference to over-analysis. Often the intuitive measures to reduce cost or increase profit are the right ones. Employees understand that hard decisions are necessary to save the business, but expect fairness and due process to be observed.

  • Keep Communicating: it is vital to keep employees, shareholders, backers and other interested parties informed – to the maximum extent that common sense and due process allow. 


BGML has direct managing director experience of turnaround situations within manufacturing SMEs and can support you throughout the process – either on a consultancy or interim management basis. 

We can support the CEO/managing director in the multitude of stressful, urgent and demanding tasks that come on top of ‘the day job’. 


We can also support your sales management, to ensure a razor-sharp focus on revenue generation and margin control.


BGML can help with the introduction of an insolvency practitioner within the ibd Business Advice Group. We also have a wide range of other financial and operational turnaround knowledge and experience to bring to bear.

If in any doubt regarding the trading position of the company, it is vital to engage a fully qualified insolvency practitioner without delay. 

Here are some helpful resources:

Insolvency Practitioners Association

Insolvency Direct

Turnaround Management Association

HM Government Insolvency Service

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