In our roles as advisers to the directors of owner-managed businesses and SMEs, we are used to approaching situations with a clinically and analytically to assess the problems faced.
However, there are, in my opinion, other attributes these directors require from us as their advisers.
I recently met someone who has developed a unique perspective on the stresses and strains faced by these company directors. The person I met has carried out what I think is the only empirical study of the emotional aspects of running a financially distressed business. They interviewed many people involved with businesses which have traded in financial distress and in many cases entered insolvency. Through meeting this person and reading their book, I now have a better understanding of the types of problems faced by directors of companies in distress. Problems at work often manifest themselves into problems at home. The stress they experience can become intolerable, and in most cases exhausting, with some turning to drink and drugs to cope.
This is why I believe that what these individuals need is a service where advisers can become hands-on confidantes, friends, coaches, experts – an indispensable person who they can trust at a most difficult time. One way to gain trust is to demonstrate empathy and understanding. The alternative of approaching company directors and convincing them to hire a turnaround expert, who may coldly and dispassionately tell them how they have got things wrong, is a hard sell and a service they might be reluctant to purchase.
Remuneration is another issue. We all know that businesses in distress have issues in generating sufficient funds to pay fees. Therefore flexibility in how advisers and practitioners are remunerated is also vital. We should be looking at modelling a business product with this in mind, as well as showing greater empathy.
Turnaround professionals have relied upon referrals from interested stakeholders and those that have the authority to impose an appointment upon a board. Likewise banks have a few experts they work with on a day-to-day basis, although I understand their list of preferred turnaround professionals includes just 50 names. This does not generate sufficient opportunities for all of the turnaround professionals that there are.
Therefore, I believe there is an opportunity for us to develop a new product which would appeal to the considerable number of businesses that require a more empathetic service from us. In considering the emotional aspects of distress and insolvency we can take a more holistic approach which would be of considerable value to owner-managed businesses.
This approach would also help to take them through the decline curve, towards becoming a positive restructured business having experienced a successful turnaround.
For more information, help or advice please contact Andrew Cawkwell on 0191 211 7957.