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Business Consulting · Turnaround
No company goes under on the day it runs out of money. It goes under in the eleven weeks before that, while everybody was still busy being optimistic. By the time the word insolvency is said out loud in the room, most of the useful options have already expired quietly, one per week, unnoticed.
This is what a rescue plan actually looks like when it is built properly: not a strategy document, not a cost-cutting round, but a short, brutal sequence run against a calendar. Below is the sequence, a worked example of it, and a calculator that tells you which part of it applies to you today.
One number decides the plan
Turnaround work has a single entry question, and it is not “why are we losing money”. It is how many weeks of cash are left. That number, and nothing else, determines whether you are running a repair, a restructuring, or an orderly wind-down — and treating a four-week problem with a six-month plan is the most common way a solvable situation becomes a terminal one.
Cash runway — three inputs
€
€
€
3.5
Weeks of runway
At this burn rate the account empties before the end of the month. Everything in the plan below compresses into the first fourteen days — and the decisions stop being commercial and start being legal.
Collections, not invoices. Payments actually leaving the account, not accruals. If you cannot fill these three fields from memory or in under an hour, that is itself the first finding.
Profit is an opinion held quarterly. Cash is a fact that arrives every Friday.
A worked example
The company below is a composite — assembled from the shape of situations we see, not a real client, and the figures are illustrative. It is a fourteen-person contract metal fabrication firm with €2.1m of annual turnover, a full order book, and four weeks of cash. A full order book is not a contradiction here; it is usually the cause.
Composite example · fabrication SME, 14 staff
Profitable on paper for three years. Never once ran a cash calendar.
€2.1mTurnover
€38kCash left
−€11kWeekly net
3.5Weeks of runway
Phase 1 · Stop the bleeding
−€11,000
Weekly net cash at the end of this phase
Nothing in that sequence is clever. The order is the whole product: every phase buys the time the next one needs. Renegotiating with suppliers in week one — before you know which customers are actually profitable — means renegotiating from a story instead of a fact, and you only get to do it once.
The five levers, in the order they actually work
Every distressed company has the same five levers available. They differ enormously in how fast they produce cash and how much damage they do on the way. Most owners pull them in almost exactly the wrong order, because the slowest lever is the one that feels the most decisive.
1Collections discipline0–7 days
The fastest cash in any distressed business is already yours; it is sitting in someone else’s account past its due date. A named person, a daily list, a phone call instead of an email, and a rule that nobody ships to an account more than sixty days overdue. Damage: none. This is the only lever with no downside, which is why it goes first — and why its absence is diagnostic of everything else.
2Price, and exiting loss-making work7–30 days
In almost every SME we look at, a minority of customers carries the margin and a stubborn tail destroys it — usually the demanding, low-price, high-rework accounts that management defends hardest because they are “volume”. Repricing or resigning that tail improves cash within a month and costs nothing to implement. Damage: reputational, contained — and far smaller than owners fear.
3Supplier and creditor standstill3–14 days
Payment terms are renegotiable far more often than people believe — but only once, and only if you go to them before you miss the payment. A creditor who is told in advance becomes a partner in a schedule; a creditor who finds out becomes a claimant. Damage: relationship, permanent if handled badly. Never promise a date you have not modelled in the cash calendar.
4Asset, stock and subscription cull7–21 days
Idle machines, dead stock, four software subscriptions doing one job, a leased vehicle nobody drives. Individually small; together, often a month of runway. Damage: low. The reason it is fourth rather than first is that it consumes management attention out of proportion to the cash it releases — do it in parallel, never as the main effort.
5Headcount14–60 days
The lever most owners reach for first is the slowest to produce cash — notice periods, severance and statutory process mean redundancies frequently cost money in the first month and only pay back in the second or third. It is also the only lever that is effectively irreversible: the people who leave first are the ones with options. Damage: highest. It belongs in a rescue plan, but as a consequence of decisions one through four, not as a substitute for them.
Five ways companies lose the weeks they had
- Waiting for the big order. Rescue plans built on one contract landing are not plans; they are bets with employees’ salaries as the stake.
- Paying the loudest creditor first. Whoever shouts is not automatically whoever can stop your operation tomorrow. Pay by criticality, not by volume.
- New borrowing to cover an operating loss. Debt buys time for a business model that works. It accelerates the end of one that does not.
- Silence towards the bank, the tax authority and the accountant. All three respond very differently to an early conversation than to a discovered fact — and all three keep records of which one they got.
- Calling a lawyer last. Directors’ duties change as insolvency approaches, in every European jurisdiction. That advice is worth most while options still exist and nearly nothing afterwards.
What “rescued” actually means
Not every company can be saved, and a consultant who tells you otherwise before looking at the numbers is selling hope by the hour. Roughly speaking there are three honest outcomes, and the runway number at the top of this page usually indicates which one is on the table.
Repaired — the business model works and the cash management did not. This is the most common finding and the most fixable one. Restructured — parts of the business are viable and parts are quietly consuming the rest; the plan is to keep the first and stop the second. Wound down in order — the model no longer works, and the remaining value lies in ending it deliberately: creditors handled, obligations met, the founders’ next company not born with the last one’s debts attached. That third outcome is not a defeat. Executed badly, though, it is the one that follows people for years.
Where we come in
We work with owners in the first three weeks — building the cash calendar, running the customer and margin triage, and putting the sequence above against a real calendar with real dates. Clear thinking for complicated decisions, before the options expire.
Talk to us confidentiallyThis article is general business and management consulting content. It is not legal, tax, accounting or insolvency advice, and it does not describe the formal procedures of any particular jurisdiction. Directors’ duties near insolvency are governed by national law — take qualified local legal and accounting advice early. Sky Athena Kft. · 1064 Budapest, Izabella utca 68/B · info@skyathena.com
