90 Second Lessons: Working for a Struggling Business: Can this Car Be Turned Around?

Editors’ Note: This is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to [email protected] and we will try to answer it.

Question

Howard S. writes, I work for a company that is struggling and I’ve been offered a position at a competitor. I’d like to stay, but not if my company is going to go out of business. Can you help me figure out if my company can be turned around?

Answer

Determining if an organization has the internal ability and resources to turn itself around generally involves answering the following questions about its operations:

1. Does a viable core still exist?
2. Will the cash flow be enough to support the turnaround?
3. Are key employees capable of doing what’s required?
4. Is there a willingness to change?

Extrinsic factors also have to be considered. For example, how is the overall economy doing and how should that impact your company? What about competition? Is there anything happening, like the introduction of new technology, that could impact the business?

Remember, a turnaround can be accomplished in many ways, and bankruptcy does not mean the company will simply go out of business. Rather, it can be used as a tool to accomplish a turnaround.

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[Editor’s note: To learn more about this and related topics, you may want to attend the following webinars:

• Business Breakups
• The Intersection of Bankruptcy and… Labor/Employment Law]

This 90 Second Lesson is based, in substantial part, on material reprinted from “Commercial Bankruptcy Litigation 2d” and “Strategic Alternatives For and Against Distressed Businesses,” with permission of Thomson Reuters. If you are a Westlaw subscriber, you can read more about this particular subject here.]