When you need financing for a distressed business, keep in mind three important points:
- An experienced, outside turnaround specialist can see solutions you don't and can find the root cause of your business woes while helping you obtain an infusion of cash.
- Operate as if cash is king by spending less, knowing where every dollar goes, and refraining from spending until you make money.
- Beef up your management team. You need qualified key staffers to rebuild your company. Founders need to be able to recruit leaders for the next stage of growth. Shed deadwood – unproductive staff or assets.
Action Steps
The best contacts and resources to help you get it done
Seek help from an investment banker
Investment bankers who specialize in turnarounds can help you find financing from investors willing to take bigger risks than banks – and sometimes an equity position in your company.I recommend: Shelton Carter Hall & Co. is a group of investment bankers and management consultants specializing in turnaround management advisory services. Mirus Capital Advisors, investment bankers since 1987,says financing should be dictated by operating plans, not vice versa. It works with entrepreneurs and family-owned businesses, finding solutions for distressed companies. Kramer Levin represents lenders to companies in and out of bankruptcy.
Bring in turnaround specialists to help line up financing
Turnaround management specialists can help a struggling business locate needed financing.I recommend: Find specialists through the Turnaround Management Association. Turnaround Consultants International also has helpful advice and information. The Association of Certified Turnaround Professionals lets you search for a specialist in your area.
Hire someone with the right credentials
Some types of turnaround professionals can earn certifications and must adhere to a standard of excellence.I recommend: The Association of Insolvency and Restructuring Advisors is a national, not-for-profit group serving business turnarounds, restructuring and bankruptcy practitioners. Anderson Bauman Tourtellot Vos is a turnaround management firm, specializing in operational and financial restructuring for troubled companies.
Try free advice
Small business development centers offer free advice that can help salvage a distressed business.I recommend: Locate a Small Business Development Center near to you.
Find quick cash based on future sales
Get a business capital advancebased on future receipts – without showing business and personal tax returns, collateral, personal and business guarantees or a business plan.You'll need to produce the past four months' Mastercard and Visa receipts.I recommend: Merchants First accepts most applicants regardless of credit rating and wires funds – from $3,000 to $250,000 - within seven days of completed contracts. Instant Capital Solutions offers FlowFunding and partners with Wells Fargo and Brown brothers Harriman, the nation's oldest privately owned bank. Business Cash Advance offers cash ifyou have at least $2,100 in Mastercard or Visa transactions per month; have no prior, unresolved bankruptcy; and have been in business at least 12 months.
Tips & Tactics
Helpful advice for making the most of this Guide
- A good investment banker will not only know where to look for financing, he will know what the financing source needs and then get it.
- Recognize the red flags of a faltering company: consistent operating losses, cash flow shortages, departure of key employees, decline of more than 5 percent market share for two consecutive quarters.
- Timing counts in a distressed market. Be decisive and take action instead of waiting for things to improve.
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