There are a wide variety of people, groups and bodies that will have an interest in the success of your business, known in general as stakeholders, and who you might therefore wish to call on for support to see you through your difficulties and to rebuild your business. This article discusses some of the key issues in managing stakeholders during a turnaround. 

Who Are Your Stakeholders?

Some of the key stakeholders that need to be 'on board' for any turnaround are easy to identify. The shareholders, directors, management, employees and bankers, or other funders will all be obvious players in any business restructuring discussions, and these groups naturally tend to be the focus of much of the communication, but it is important not to forget the wider communities that will have an interest. These will include:

The trade creditors (and increasingly these days the credit insurers such as Trade Indemnity Plc or Euler Hermes), who will have an existing interest in respect of the level of credit they already have at risk and an interest in the level of business they can do in future with you. The levels of support they are prepared to give to the business going forwards will be vital for managing the trading cash flows.

Landlords are creditors with powerful collection tools at their disposal, but again they have an interest not only in collecting the rent currently due, but in your continued ability to pay rent into the future and the strength of your covenant, on which their borrowing ability may depend.

Customers are the most vital resource required for your business's future, so their interest in the business should always be part of your considerations. 

Of course, this is not an exhaustive list and many other bodies may have an interest that needs to be considered, from licensing organisations to local authorities.

What Should You Communicate?

Successful communication starts not just with knowing what you want to say, but by also thinking about what the other party is going to be interested in so you can tailor your message to your audience. So for each key group, begin by asking yourself:

• how much do they stand to lose if the business fails?
• how much do they stand to gain if the business succeeds, or to put it crudely, what's in it for them?

These factors will generally determine the degree of support you can hope to obtain from each stakeholder.

The degree to which you will actually be able to obtain support will then depend largely on the level of confidence you are able to convince them to have, in both you and the achievability of your plan, as well any change in their risk position that the plan requires.

Techniques for getting each group on board and their degree of active involvement in the process will vary. Providing your bank with a brief presentation to demonstrate you understand the business's problems and have a turnaround plan can for example be very valuable in securing bank support, and should include:

• a brief high level analysis of the business:
• causes of decline
• your competitive position
• the key issues
• your success factors.
• your turnaround strategy.
• a copy of your forecasts and action plan.
• details of any specific support you are seeking from them.
• your proposals for keeping them informed of progress.

I have covered how to ensure you bank continues to support you in more detail elsewhere which I won't repeat here, but the general principles that apply to banks will go for many other stakeholders. 

How Should You Communicate?

With a large number of interested parties and issues, managing the messages can be complex. One approach sometimes used in acquisitions can help in providing a systematic and structured approach by using a Q&A grid to prepare a message matrix. To use this technique, simply list all the interested parties across the top of a sheet in as much detail as you think you will need. Then you should think up all the basic, rude, blunt questions that any of them might want to know and list these down the left. This will then provide you with a grid that you can begin to complete where each box will require an answer that can be communicated to the relevant parties.

In each case you should consider carefully the best medium for the message you want to put across to a particular audience, as the means by which people are provided with information can significantly affect the way they react to it. For example, if the plan unfortunately requires a factory to be closed, then this needs to be communicated to those employees by way a face-to-face meeting rather than announced as a press release to local media.

However once the news is out, as a general rule you should put the answer out as widely as possible. It doesn't matter of someone hears it three times as long as everybody who needs to, hears it at least once

This approach ensures that as far as possible you have a consistent and coherent message on any topic and should follow these simple rules:

• your communication with stakeholders needs to be full and frank, and as your plan progresses, keep the stakeholders informed of both good and bad news in order to maintain your credibility.
• if you need to change your plan you will need to brief stakeholders on the change and reason for it, and reaffirm their commitment to your plan.
• ensuring that early targets are set so that they can definitely be hit will help to ensure that your credibility with stakeholders is established right from the start.

So, shouldn't you start to plan your communication strategy by identifying the stakeholders that you will need to manage and considering what you will need to say to them?

Of course the information contained in an article like this can never be a full statement of the legal position as the relevant laws are complex and liable to change. This article can only therefore be a general guide as to the issues involved and as these can have serious implications you should always seek appropriate professional advice on your own particular circumstances before taking any action.

Author Mark Blayney is an accredited business rescue expert specialising in owner managed businesses. For more information on managing stakeholders, a free copy of his 13 Key Steps Guide to managing a turnaround, or free referral to a local expert, contact him at http://www.gpsuk.biz