What Are the Risks of Working with a Turnaround Consultant?

When facing business difficulties, it's important to understand the risks associated with working with a turnaround consultant. Learn about common operational risks & difficulties as well as unique skills & management style.

What Are the Risks of Working with a Turnaround Consultant?

When a business is facing difficulties, it can be hard to know where to turn for help. A turnaround consultant can be a valuable asset in helping the organization get back on track, but there are certain risks associated with working with one that should be taken into account. In this article, we'll explore the common operational risks and difficulties that can impede your recovery process, as well as the unique skills and management style of a turnaround specialist. One of the most important aspects of working with a turnaround consultant is effective communication. Without clear communication between the consultant and the organization, it can be difficult to align goals and objectives.

Change specialists also possess a variety of special behavioral skills and management style. They are comfortable in intense situations and enjoy being involved in operations. They often have to work with incomplete or inaccurate data and rely on their intuition to make decisions. Turnaround consultants create credibility by doing what they say they are going to do and by building trust. As part of your recovery plan, a safety consultant will develop a comprehensive safety plan to address all identified hazards.

This plan should include detailed steps for preparing for renovation, which can help limit the time your plant will be closed and quickly meet industry standards. It's important to note that just because someone has experience as a chief financial officer or corporate banker doesn't mean they are qualified to be a restructuring specialist. A troubled company often needs more money than its current lender will provide, so management may assume that a successful recovery will require a new lender. In fact, a new lender is likely to set stricter terms and restrictions, charge significantly higher fees due to the risk of getting into a difficult situation, and control the loan much more closely. One of the resources that the restructuring specialist provides to contracting is credibility with lenders and, consequently, improved access to credit. It's important for management and staff to understand that their jobs are related to the recovery effort when initially hiring a restructuring specialist.

Unfortunately, as the number of successful business restructurings has increased in recent years, it has also attracted operators who pose as qualified specialists in restructuring processes. When selecting a restructuring consultant, it's essential to spend time looking for the company that best suits your needs and evaluating the current state of your operations. The restructuring process specialist should discuss these issues openly with their client and, if it is determined that the answer to any of the above questions is negative, the contracting parameters should be re-examined. A change of course is an enormous task for most organizations, not only because of financial pressures but also because these pauses in production tend to generate unexpected questions and logistical problems that need to be addressed. Given the difficult issues faced by a struggling company, there is often some tension between the owners, management and employees of the company and the restructuring specialist. With the right strategy and guidance, however, restructuring consultants can help you identify problems quickly and develop solutions that ensure a successful recovery.

Security advisors can reduce stress and downtime related to renovation by evaluating risks, developing a pre-recovery plan, and overseeing execution until the organization is back up and running.