Bankruptcy- Protection or Plague?

DO YOU PROJECT AND PLAN (in other words...stay stress-free?)


Forever 21 just became the latest victim of Chapter 11 bankruptcy protection. While Chapter 11 will provide them with time to reorganize their obligations and sell parts of their business (ostensibly to make them healthy again), we can still be certain that something went wrong...terribly wrong.

So what happened?

Historically, most retailers don't survive Chapter 11 in the long-term. Is it a plague? Or maybe it's just something to do with retail. What can be done to stop this from happening? Or better put...what steps should a company take to stop this from happening? In retrospect, many companies who file Chapter 11 determine later that they had to go the bankruptcy route because they were not able to keep up with the competition...whether it was online sales, trends, or other retailers...something was not planned for.

I enjoy playing chess, which is why I compare the demise of a company to that of the weaker chess player. The weaker, less experienced (or over-confident) player often fails to take into consideration possibilities (and probabilities) way ahead of its next move.

Whereas, the stronger company (no matter what the size) will do these things by carefully paying attention to projections and contingency planning. The ones that don't...need to start! Ongoing forecasting and planning must be integrated as part of any company's operations.

It is critical that the CFO, and management team, is armed with the right resources, financial reports and unbiased metrics to provide meaningful and practical information used in planning.

If a company does not have a full-time CFO, a Virtual CFO should be considered.

#turnaroundmanagement

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