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A liquidity trap is often the root and beginning of many business difficulties. Most troubled businesses face a similar symptomatic problem - the inability to meet their debt obligations with banks and suppliers. When not addressed immediately, this problem will erode the confidence of the company's bankers, key suppliers, customers and employees.
Methodology
Our business turnaround methodology involves the following three phases, first working towards a stabilisation phase in order to rehabilitate, and then to recover, reinvent and rebuild the right business, if necessary, to get it up and going again.
Phase 1 - Stabilisation Phase
In this phase, we work with the entrepreneur to stabilise the cash flows of the company whilst managing the relationship with its principal bankers, key suppliers, customers and employees, in order to "buy" critical time to develop a workable recovery plan. We will work closely with the management of the company to ascertain the viability of the business, the extent of their liquidity problem and help them develop a plan to restructure its existing debt obligations, businesses, and cost structures.
Phase 2 - Rehabilitation Phase
The Rehabilitation Phase will involve us working closely with the management to restructure existing bank facilities and trade terms with key suppliers, negotiate for new banking facilities, or find new monies to fund profitable business activities. The key is to preserve and accelerate the growth of profitable and cash-generating business activities so that the company can come out of their liquidity trap as soon as possible.
Phase 3 - Recovery Phase
This last phase of our turnaround efforts will see us working closely with the management to monitor key measurable targets and the progress of the recovery. We will also assist in identifying further profit improvement opportunities within the restructured business. This phase is also a confidence-building phase, and involves the repositioning of the business and strengthening of business fundamentals to weather competition and adverse economic conditions.