The necessity for turnaround is not always caused by crisis. Ideally, a director will predict a company’s future based on market conditions or outside influences such as political, economic, social, technological, environmental or legal issues. In circumstances where future confrontational issues are foreseen, the process of turnaround is less critical and the benefit of time often affords the turnaround a better prospect of success.

However, the luxury of foresight is not always available. An unexpected event, such as the insolvency of a major debtor or the termination of a profitable contract, can cause significant financial strain on the business. Alternatively, an undetected gradual subtle decline in the business’ profitability and/or cash flow can lead to a company’s demise.

The following are some of the early warning signs that may help identify the need for the engagement of a turnaround specialist by a company in order to maximise the chances of a successful outcome.