In 2013, thousands of entrepreneurs will take critical steps in converting their troubled businesses into manageable new opportunities via corporate renewal. Understanding that times, technologies and customers change, savvy business owners with successful companies will also invest in corporate renewal in the coming year.
Simply put – corporate renewal gives businesses an action plan to evolve and change with the times while keeping doors open, debt minimized and – if needed – creditors at bay. In developing the plan, often an outside advisor will oversee the process and serve as a go-between among all parties, as well as act as an impartial outside voice.
The research that goes into this plan almost always involves four key areas:
· Finances of the business
· How the company conducts its business
· The geographical market where the business is operating and
· The volatility of the industry itself
The Troubled Business’ View
Distressed businesses generally have several of the following internal issues:
· Ineffective management style
· Changing customer base
· Weak financial controls or functions
· Explosive growth – too much too fast
· Recent loss of major leader
· Recent loss of major customer(s)
· General economic, or industry-specific, downturn
For example, it is easy to picture a business that services the new home industry – such as a plumbing or landscape company – struggling financially. Perhaps during the mid-2000s, these then-booming businesses may have even invested in their own building and other real estate holdings, making matters worse given today’s changed climate.
Through a corporate renewal process, a business like this can be helped to sell its building with a leaseback option, appeasing creditors. Using the new influx of cash flow, it can then negotiate a pay-off of additional debts and reinvest into a new business model – perhaps a new service line focused on assisting with older home remodels.
The Family Business’ View
Aside from the unpredictable economic climate in recent years, among the most oft-noted reasons companies consider a corporate renewal is when family is involved.
In many cases, the loss of a family member involved in the business – whether through choice or death – brings about the need for proactive, organized changed. Which family member will assume his/her duties? What if the owners divorce? What if nepotism put too many ineffective cooks in the kitchen?
When emotions are running high – as is often the case when family is involved – outside counsel from time-to-time, no matter that business’ success — is critical.
The Successful Business’ View
The best of the best businesses in Arizona are investing in corporate renewal each year, often internally.
A business like Go Daddy, while wildly successful, understands that technology is always changing. As a result, the company’s leadership realizes their business could be obsolete if it doesn’t evolve over time.
An actual plan arms each of these types of businesses with the ability to:
· Forecast the financial climate ahead
· Understand how to best liquidate assets as needed
· Reduce or redirect expenses
· Develop new avenues for growth
With a fresh eye in the New Year, among every business’ New Year’s Resolutions should be corporate renewal.
Joan Brubacher is CFO/principal at Resolute Commercial Services, a receivership and corporate renewal firm based in Scottsdale. Brubacher can be reached at (480) 947-3321. www.resolutecommercial.com