There are stratagems that troubled companies can use to save themselves from dreadful straits and recuperate their former financial success. These same sorts of strategies are valuable for financial executives and business owners to comprehend how their firms can avoid financial failure and turbulence.
Lion’s Trinity Capital is a financial services company providing financial advising services in Orange County. Logically, firms that are on the very precipice of bankruptcy or failure do not have many alternatives or time left. It has to fasten itself, or sink. No entrepreneurs or business owners want to face liquidation, bankruptcy, and other creditor issues. Do economically failing firms survive because of a renewal in products or their services, or have they in fact implemented on improved financial management. This is a tricky question, because the very monetary problems that beset a firm hinder it in getting new sales, regaining supplier credibility, and acquiring inventory.
Also, let’s be realistic, banks and other finance companies do not throw themselves at failing firms with financial lines of credit, offers of loans, etc. In reality, what generally happens is that the company is forced to guarantee some or all assets at much higher rates, sometimes merely emphasizing the financial problems that were already there. There are three or four concrete strategies that can save the firm.
Assets have worth. They can be sold; re financed, or vowed to secure new financing. This kind of strategy works best when it works for all parties, the lender and the company, or the company and another firm. It either must work or it does not. Asset maneuvers have 3 stages of success: assets can be sold, assets can be used to get a new loan, or they can, to some extent of a worst case situation, be liquidated.
Then again on the other side of assets on the balance sheet is debt and equity. Debt can be structured appropriately to make sure the lender gets a realistic reward, and the company is able to both reimburse and survive. As an example, a firm could issue debt, and refund only when the company is earning profits again. This would generally entail higher rates, but again, the transaction has to make sense both for lender and customer. A solid option is to simply re-structure existing debt at new amortizations and rates.
Sometimes, a firm has to look to the outside for assistance. Since the managers and owners are often too close to the predicament it is somewhat of an archetypal case of not seeing the forest for the trees. Outside industry experts and consultants of Lion’s Trinity Capital can often bring a solution to the table. They have insights that management simply did not have. These strategies include developing new product and sales strategies; bring in new management, or considering a premeditated merger.
In summing up, any person who has worked through several business cycles over countless years knows that companies can, in reality, be saved. Some go on to be the new luminaries of their respective industry. The company must clearly come across what the problem is, and then adapt strategies, monetary or otherwise, to fix those problems.