Business turnaround services: what actually gets done.
Business turnaround services are the practical workstreams used to return an underperforming but viable company to sustainable profit. In the UK they normally cover five things: cash and working capital, margin and pricing, cost structure, funding, and management capability. They are delivered in that order, because cash buys the time to do the rest and cost cutting done first usually removes the capacity to recover.
Written by Lee Antony Smith. 32 M&A transactions over 12 years, five trading companies across HVAC, Renewable Energy, Construction and managed IT services.
In the order they actually happen.
The sequence is the part that matters. Almost every failed recovery has the same signature: cost cutting done first, funding sought too late, and the management layer never built at all, so the business returns to exactly where it started eighteen months later.
| Workstream | What it covers | Typical timing | Why it sits here |
|---|---|---|---|
| 1. Cash and working capital | Thirteen week rolling cash forecast. Debtor days, retentions, work in progress, stock and supplier terms | Weeks 1 to 4 | Releases money already owed to you, and needs nobody else to agree to it |
| 2. Margin and pricing | Job and contract level costing, quoting discipline, and identifying the work that loses money | Weeks 2 to 8 | Usually returns more than any cost-cutting exercise, and is invisible until somebody costs it |
| 3. Cost structure | Overhead review, supplier renegotiation, and spending that quietly became permanent | Weeks 6 to 16 | Deliberately fourth, not first. Cutting delivery capacity is how a recoverable business dies |
| 4. Funding | Asset-backed lending, restructured facilities, and capital in as equity rather than as more debt | Weeks 4 to 20 | A struggling business rarely needs another loan on top of one it cannot service |
| 5. Management and systems | The layer of management underneath the owner, plus finance, IT, HR and reporting | Month 3 onward | The only workstream that stops the problem coming back, and the one consultants leave before |
Cash first. Every time.
Until a thirteen week cash forecast exists, nobody in the building knows how much time the business has, and every decision after that is being made blind.
- 01Thirteen week cash
A weekly cash forecast out to thirteen weeks, built properly. Until that exists nobody knows how much time the business actually has, and that includes you.
- 02Stabilise
Protect the payroll, reach the creditors who matter before they reach you, and stop the cash leaving faster than it arrives. Nothing structural happens until the immediate pressure is off.
- 03Find the real margin
Cost the jobs and the contracts one by one. In most businesses a small number of them are quietly being funded by the rest, and that is visible within a fortnight once somebody actually looks.
- 04Rebuild and invest
Capital in, back office across to the group, the management layer built underneath you, and growth funded properly. This is the part a consultant leaving on day ninety never reaches.
Six levers, ordered by return per unit of disruption.
These are the specific places a recovery is usually found in an established, owner-managed business. None of them are dramatic, which is exactly why they get missed.
Almost every struggling business is a cash problem wearing a profit problem’s clothes. Debtor days, work in progress, retentions, stock and payment terms come first, because they release money that is already yours and they need nobody’s permission.
Most owner-managed businesses price on a margin they last checked years ago. Job-level costing, quoting discipline, and knowing which contracts genuinely lose money usually move more profit than any cost-cutting exercise does.
Cost cutting is the last lever, not the first, and cutting the wrong things is how a recoverable business becomes a dead one. The people who deliver the work stay. The spending that quietly became permanent gets looked at properly.
A business where everything routes through the owner has a growth ceiling and a valuation discount at the same time. Building the layer underneath fixes both. It is also the thing most owners never get to, because they are too busy working.
Asset-backed lending against debtors, stock and equipment, restructured facilities, and capital going in as equity rather than as borrowing. A business that is struggling rarely needs another loan stacked on the one it cannot already service.
Finance, IT, HR, compliance and systems move across to the group. That is infrastructure you could never justify buying on your own, and it hands back the part of the week you were losing to administration.
What turnaround services are not.
Four things routinely sold as turnaround that are something else. Knowing the difference tells you who you should actually be calling, which is occasionally not me.
A CVA, an administration or a liquidation is a formal process run by a licensed insolvency practitioner, for a company that is insolvent. Turnaround work happens before that line, on a company that is still viable. I am not an insolvency practitioner.
Restructuring changes the legal or financial shape of a business: the debt, the entities, the balance sheet. It is frequently part of a turnaround and it is almost never sufficient by itself, because the thing that created the debt is usually still running.
Cost is the fourth workstream, not the first. A business cut to the point where it cannot deliver has not been turned around, it has been made smaller and slower on the way to the same outcome.
Stabilising cash takes weeks. Sustainable profit typically takes twelve to twenty-four months, and rebuilding what was lost takes longer than that. Anybody selling ninety days is describing the first workstream and pricing it as the whole recovery.
I do not sell turnaround services. I buy the business and fix it.
Everything on this page describes work I do inside companies I own. There is no day rate, no retainer and no success fee, because I am not selling my time. I acquire between 40 and 100% of underperforming but viable UK HVAC, Renewable Energy and Construction businesses, put capital and back office behind them, and take the return in equity.
In most deals the owner keeps a stake, which means a recovery pays them twice: once at completion and again when the group scales. That is the whole argument for doing it this way rather than paying somebody by the day.
Turnaround services: common questions.
What are business turnaround services?
Business turnaround services are the practical workstreams that return an underperforming but viable company to sustainable profit. In UK practice there are five: cash and working capital, margin and pricing, cost structure, funding, and management capability. They run in that order. Cash comes first because it buys the time to do everything else, and cost cutting comes fourth because doing it first usually removes the capacity to recover.
How much do business turnaround services cost in the UK?
Most firms charge a day rate, commonly £800 to £2,500, sometimes with a success fee on top, and it is payable whether the recovery works or not. That money leaves a business that is short of cash. I do not work that way: I take equity in the business instead of charging a fee, so there is no day rate, no retainer and nothing invoiced during the recovery.
What is the difference between turnaround and restructuring?
Restructuring changes the shape of a business: its debt, its entities, its balance sheet or its cost base. Turnaround changes its performance. Restructuring is frequently one part of a turnaround, and on its own it rarely holds, because the trading problem that created the debt is usually still there. A restructured business with the same margins ends up in the same position a year later.
What happens in the first ninety days of a turnaround?
Four things. A thirteen week cash forecast, built properly, so everybody knows how much time there actually is. Stabilisation, meaning payroll protected and the creditors who matter spoken to early. Job and contract level costing, which almost always finds work that is quietly being subsidised by the rest. Then the rebuild starts: funding, systems and the management layer underneath the owner.
Do turnaround firms invest their own money?
Most do not. The standard model is advisory, paid by the day, with no capital at risk. A small number of buyers work the other way and put capital in for equity, which is what I do. The practical difference is what happens on day ninety-one: an adviser leaves with an invoice paid, whereas an owner is still there because the business is now partly theirs.
Can turnaround services work for a construction or HVAC business?
Yes, and those sectors have a specific version of the problem. Retentions, applications, long payment terms and work in progress mean a busy contractor can be genuinely profitable and still run out of cash, which is a working capital issue rather than a trading one. I own companies in HVAC, Renewable Energy and Construction, so it is the version of this I know best.
The terminology questions, including the difference between a turnaround specialist, a turnaround manager and a turnaround consultant, are answered in full in the main guide.
Which of the five is actually your problem?
Most owners think it is cost. It is usually cash or margin, and the two have completely different fixes. Tell me roughly where the business is and I will give you a straight read on which one you are dealing with.
Prefer to talk now? Call 020 3475 5475 or email lee@verdanicapital.co.uk.
The sequence matters more than the effort.
Businesses rarely fail from lack of work. They fail from doing the right things in the wrong order, usually with the cash forecast built last.
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