Background & Problem
Turnover: £650K – £750K
The Company is well established (some 25 years) and a privately owned family business.
It had, however, been loosing sales to overseas competition over a period of several years, and this had been eroding previous profits and draining the cash reserves.
The stakeholders were at the end of their tether; the management knew where it wanted to go but with the accumulated debt and lack of funding, did not know how to get there. There was also the consideration of personal guarantees having been given to bankers and the landlord.
It was immediately obvious that the Company was not going to trade its way out of the situation. After listening to advice and serious soul searching by the owners, it was agreed that the only future for the business would be the use of recent protective legislation which would relieve the debt burden of the past and, with careful planning, keep all the major suppliers, customers and the majority of the staff.
Measures were taken to reduce the effect of the personal guarantees, financing was arranged and the plan executed.
As soon as the agreed actions were put in motion, the management took up the challenge and the new vision. Sales were made profitably and, beyond the forecast, to the extent that all the staff was retained and some were working overtime. The initial cash requirement was well managed and the management were relived that there were no further sleepless nights