Business Workouts: The Basics
Business workouts involve companies devising new business plans that restructure their debt in a manner that will allow them to meet their responsibilities to creditors while also giving them the opportunity to regain their footing and become productive again. The implementation of new strategies is essential to the success of your business workout. These strategies are focused on solving problems related to your rising debt, increasing productivity, and utilizing all business assets effectively.
The new business plan must provide creditors with proof that it will be viable and agreements regarding new payment arrangements with and repayment of each creditor must be made. Creditors will often agree to a business workout if they perceive that it will benefit them more than if the struggling company is liquidated, its assets sold, and the proceeds distributed to those to whom the company owes money. In order to prove that this is possible, your business workout will have to be based on facts related to your business, accurate projections, and reasonable proposals concerning your debt.
Specifically, the process involved in business workouts is geared towards developing a business plan that includes new strategies, methods, and tactics focusing on ensuring the company’s profitability. That new business plan must prove that the business workout is viable.
There are four basic parts to this process:
- Analysis ofthe company’s debt
- Analysis of the company’s financial situation
- Development of the business workout
- Implementation of the workout