When crisis strikes: A practical guide to business recovery before insolvency

When businesses find themselves blindsided by crisis, they need experienced guidance to navigate the storm. 

Tim Gumbleton, Director in RSM's Restructuring & Recovery division, brings three decades of expertise to help businesses across Regional NSW and Victoria respond to financial distress, governance challenges and restructuring.

With deep experience across restructuring, dispute resolution, financial management, insolvency and strategic advisory services, Tim works closely with a diverse range of businesses, from SMEs to not-for-profits, Indigenous organisations, and government agencies. His pragmatic, independent approach helps organisations manage financial crises, develop recovery plans, and emerge stronger for the future.

Business crisis presents in many forms. Maybe it’s your largest customer cancelling their contract or becoming insolvent and now it’s a bad debt. Perhaps a natural disaster strikes, a cyber attack or a dispute with a business partner that is escalating and risks continuity. It could be a spurious claim, the unforeseen failure of a key product or critical illness. The common business crisis scenarios include:

• Key personnel issues (sudden illness, death, or departure of critical staff)
• Market shocks (loss of a major customer or contract)
• Legal disputes (shareholder disagreements, litigation)
• Natural disasters (floods, fires, storms)
• Cyber attacks (data breaches, ransomware incidents)
• Underinsurance (businesses discovering too late that coverage falls short)
• Fatigue and burnout (owners overwhelmed and unable to manage)

Whatever the trigger, business owners often find themselves blindsided, asking the same urgent question: What now?

“At RSM, we know that insolvency isn’t the only path. In many cases, it's the option of last resort. There are practical steps that can help businesses stabilise, recover, and even emerge stronger from crisis situations. 
Early intervention together with practical and proactive communication, support and guidance are critical factors in protecting both businesses and the people behind them when crisis hits.” Tim explains.

While the trigger may vary, the pattern is often similar: severe financial strain, operational paralysis, and immense personal stress.

The Pre-Insolvency Zone — What Support Is Available?

When disaster strikes, time matters. Acting early allows business owners to access a range of support measures that can help them stay in the game:

• Government grants, financial assistance and concierge supports and resources(e.g. disaster relief funding, small business hardship grants, tax deferrals, and low-interest loans)
• Financial counsellors and professional advisors who can help assess options and model recovery scenarios.
• Banks and lenders often offer hardship provisions such as loan holidays or interest-only periods.
• Key stakeholders like suppliers, landlords, and key stakeholders may agree to revised payment terms if approached early and openly.
• Review and understand the insurance position and associated options

Importantly, each situation is unique. The earlier a business reaches out for advice, the more options can remain on the table. “Be open to having the discussion and lean on your community and stakeholders – if you don't ask, you don’t get. Too often business owners stay quiet until it is too late”, Tim explains.

Helping Businesses Stay in the Game

“Often, the very first question we help businesses work through is: Can you safely trade on? If the answer is yes, we design a tailored recovery plan. If not, we look at controlled exits that avoid formal insolvency wherever possible and minimize the risks.”

In one real-world example, Tim worked with a regional retailer facing severe debt and an outdated business model. Rather than entering insolvency, creditors agreed to pause repayments for a period of time while a complete restructuring and business transformation was implemented. The retailer pivoted, reducing overheads, offering new products attracting new customers, and then repaid creditors in full — saving both the business, its staff positions and the ongoing income earning ability of the proprietor. 

RSM’s role is to bring together the various professional services, assess options objectively, and coordinate support across all of the critical legal, financial, operational and emotional aspects of business recovery.

What To Do When You Reach the Wall

Sometimes, despite best efforts, the damage is simply too great. At that point, RSM can guide clients compassionately through more formal processes such as:

• Small Business Restructuring Plans
• Controlled wind-downs, business sales and formal exits
• Voluntary administration or liquidation as a last resort

Tim is clear: "Insolvency should never be a surprise. Our aim is always to get involved before that decision is forced."

What Are The First 3 Things You Should Do After a Business Disaster?

1. Pause and assess: Take a breath, stabilise operations, and avoid knee-jerk decisions and attractive quick fixes. “If it sounds or looks too good to be true, it usually is!”
2. Map your stakeholders: Identify who you owe, who you rely on, and where immediate support may come from and reach out to discuss your position and determine the available options.
3. Seek trusted advice: Contact professional advisors (like RSM) to help map out recovery options.

A Final Word: Resilience Starts with a Conversation

Crises are unpredictable. But having the right people in your corner makes all the difference. At RSM, we know that no two situations are the same. What matters is starting the conversation early, exploring every available pathway, and bringing calm to the chaos.

No matter how complex or overwhelming your situation may feel, you're not alone. At RSM, we've helped countless businesses across industries navigate crises, restructure with confidence, and emerge stronger on the other side. Don't just take our word for it explore our client stories to see real-life examples of how we've supported businesses through recovery and renewal: View our client testimonials here.

As Tim says, "There are always solutions. We just need to help business owners find them."

Key Takeaways:

• Insolvency is a last resort—there are many steps before that.
• Natural disasters and economic shocks can happen suddenly and unexpectedly.
• Many businesses are underprepared for financial and operational shocks.
• Support is available: government assistance, lenders, financial counsellors, advisors.
• Early conversations with experienced advisors can save businesses.

Useful links for Business owners

• SafeWork information on keeping yourself, and your staff, safe during this period
• Service NSW Business Bureau
• Financial assistance options from the NSW Government
• Rural Financial Counselling Service for primary producers and small rural business
• Visit our website for a list of business support services in our region.
• Mental Health Line: 1800 011 511
• Healthdirect: 1800 022 222
• Lifeline (crisis support): 13 11 14
• Legal Aid: 1800 801 529 (for free legal advice)
• Reach out to your local Chamber of Commerce. They are here to help.

FOR MORE INFORMATION

If you would like to learn more about the topics discussed in this article, please contact your local RSM office.