Are you an entrepreneur looking for ways to transform your startup’s financial standing? Do you want to know the best way to perform crisis management for new businesses? Would you like to overcome cash flow challenges in your startup? In any case, a turnaround or financial management consulting service will be beneficial.
Referred to as a specialized advisory management service, it plays a crucial role in rescuing startups from financial turmoil. Turnaround consultants can diagnose your startup’s multifaceted issues and offer effective solutions. These services will help your startup scale quickly and prevent early administrative failure.
In this blog, we will discuss everything startup founders need to know about turnaround or financial management consulting.
How Do You Check if Your Startup Needs a Turnaround Consultant?
As a startup founder, you might develop stress and anxiety due to financial insecurity and the fear of failure. It can happen when your company goes through a crisis of low revenue, bad reviews, etc.
During this time, you must choose a turnaround consulting service to help you with crisis management. These services can also help you deal with poor profitability and low morale through effective operational changes.
You will work with experienced turnaround consultants to determine the root cause of your startup’s crisis. They will also help create plans to counter business losses.
According to CFOshare, such services offer strategic clarity to help startups navigate through financial challenges like bad debt structures and cash shortfalls. Therefore, startups should look for the following telltale signs of financial turmoil before hiring such consultants:
- Decreasing customer service ratings
- A steady decline in sales and profitability
- Inability to budget, forecast, and plan finances
- Struggles with payroll and increased debt
- A high turnover rate among employees
Once you determine the challenges, you can analyze the areas where your startup needs improvement. Doing so will help you invest in a turnaround consultant for optimal crisis management.
How Do You Choose a Turnaround Consultant or Firm?
Industry leaders believe that you should look for the following things before choosing turnaround consulting services:
- Proof of success by checking the case studies that detail anonymous business problems and implemented solutions
- Compatibility of the business turnaround specialist and their expertise with your startup’s problems
- The ability of the consulting firm or consultant to offer trustworthy communication and relationship-building exercises
Furthermore, choose companies or individual consultants offering clear communication about the turnaround process and its timeline. Remember to check for upfront fees for the services before hiring.
Benefits of Getting a Financial Management Consulting Service for Startups
A financial management or turnaround consulting service provider will customize their operations to fit your startup’s requirements. With their help, your company can gain benefits like:
- Identifying the underlying causes of your startup’s financial crisis and implementing turnaround plans to help you stay afloat
- Providing interim management and operational support throughout the consulting service timeline
- Helping with revenue generation and restructuring the financial or operational strategies of your startup
- Analyzing pricing strategies, selling assets, and closing unprofitable business avenues
Keeping these benefits in mind, startup founders should work with consultants meticulously to execute plans that help the business recover. Once you start with this service, you can focus on forecasting, variance analysis, and budgeting for the future.
2 Challenges of Choosing a Turnaround Consulting Service for Startups
Even with so many benefits, choosing this consulting service has many challenges, especially for startups. Hence, to succeed, your startup must identify the following challenges and make efforts toward change:
#1. Financial Constraints
All startups have to deal with financial constraints. Your business might not have enough capital or funding to seek turnaround consulting services.
Usually, turnaround consulting firms charge between USD 250 and USD 400 per hour. However, independent consultants charge between USD 100 and USD 350 per hour.
To afford these services, you must have a proper plan and find ways to gain capital. Examples include self-funding, finding investors, crowdfunding, getting loans, etc.
#2. Resistant to Change
Turnaround consulting can bring new strategies and operational changes to your startup. However, as a first-time entrepreneur, you might be resistant to change because it makes you fear the unknown.
To counter this, you can stay involved throughout the turnaround consulting process. It will help you understand the unparalleled financial benefits of using the new operational strategies for your startup.
The Bottom Line
Turnaround consulting is not something startups should be ashamed of. Hiring such consultants proves that you will do anything to improve and survive in a competitive industry. The company’s stakeholders, suppliers, employees, and clients will feel relieved that you have engaged a turnaround consultant to become better.
Even big corporations like Rolls-Royce use turnaround consultants to help streamline and restructure their operations. The company hired consultants from McKinsey to create a turnaround plan.
In short, turnaround consulting can bring financial and strategic changes to your startup, leading to your business’s success.