Ten Steps to Avoiding Bankruptcy
After over 24 years of turning around over 1,400 troubled companies, we have learned a few things about prevention. My book, How to Turn Around a Financially Troubled Company (McGraw Hill 1982), focuses on the problem "after" a company is in trouble. The information that will follow over the next ten publications will address the mission-critical steps for avoidance. It is not necessary to ever get into the kind of trouble where survival is at stake if you make the ten steps part of your business planning.
Businesses will always have their up-and-down cycles in a capitalistic economy. Those companies that follow these steps not only survive the downturn but position themselves to increase market share and vastly increase their profits. At the same time, the market will assign a Valuation Premium to those businesses that have strong financial and operational control irrespective of economic conditions.
We know The KGI System™ works.
Each of the next ten publications will explain the steps in detail, and we hope you will find the information useful. With that said, these are the steps that we'll be discussing over the next several months:
- Have an in-place daily cash management system.
- Create a current and future-state plan that is credible to creditors, vendors, customers and employees.
- Develop an in-place downside contingency plan based on a 30% or more reduction in revenue.
- Install an early warning system related to the financials to avoid surprises with creditors.
- Have a program to ensure close relationships with the top 10 vendors.
- Have a program to ensure close relationships with the top 10 customers.
- Embrace a cost-reduction culture at the top that incorporates Lean techniques.
- Develop a core competency in rapidly connecting-the-dots between operations and the impact on the financials.
- Complete the research identifying potential outside sources of funds, if needed.
- Have a system to periodically determine your current state of health.
Whether a Company is struggling financially or on the cusp of breakthrough growth, KGI can help. Our seasoned experts work alongside management to solve complex cash flow issues, operational challenges and other business crises. If liquidity or sale is needed, KGI provides a powerful combination of services and expertise to achieve outcomes that cannot be duplicated by other standalone consulting firms.