The First 90 Days of a Turnaround

A Field-Tested Playbook for Stabilising a Distressed Business Before Structural Fixes Begin

Focus Areas: Liquidity Preservation, Operational Stabilisation, Stakeholder Management, Turnaround Governance, Preparing for Sustainable Recovery

Why the First 90 Days Matter

Reality of Distressed Businesses — most businesses fail because:

• Cash runs out before solutions are implemented
• Stakeholders lose confidence
• Management reacts too late
• Lack of reliable information delays decisions

Turnaround Objective: First 90 Days = Stabilise, Preserve, Protect

Before growth initiatives:

1. Stop the bleeding
2. Secure liquidity
3. Restore control
4. Build stakeholder confidence

Typical Symptoms of Distress

Financial Indicators

• Continuous losses
• Negative operating cash flows
• Working capital shortages
• Debt servicing defaults

Operational Indicators

• Declining productivity
• Project delays
• Inventory accumulation
• Customer complaints

Strategic Indicators

• Loss of market share
• Pricing pressure
• Weak order pipeline

Governance Indicators

• Poor MIS
• Delayed reporting
• Management conflicts

Turnaround Framework — Four Phases

Day 1–30 – Immediate Priorities

Establish Command Centre — create a Turnaround Office with daily monitoring of:

• Cash
• Collections
• Sales
• Production
• Key projects

Management Actions

• Freeze non-essential spending
• Review all payments
• Assess liquidity position
• Secure critical operations

13-Week Cash Flow Model

Most Important Tool in Turnaround

Weekly Cash Forecast:

• Opening Cash
• Collections
• Vendor Payments
• Payroll
• Debt Servicing
• Statutory Dues
• Closing Cash

Benefits: Early warning system, liquidity management, creditor negotiations, funding requirements visibility.

Liquidity Preservation

Stop Cash Leakage

• Freeze discretionary spending
• Capex suspension
• Restrict travel and entertainment
• Eliminate low ROI expenses

Accelerate Cash Inflows

• Collection drives
• Advance payments from customers
• Monetize surplus assets
• Recover receivables

Working Capital War Room

Accounts Receivable — focus on:

• Top 20 overdue customers
• Disputed invoices
• Retention amounts

Inventory — actions:

• Liquidate obsolete inventory
• Reduce slow-moving stock
• Improve inventory turns

Payables — actions:

• Negotiate payment plans
• Extend credit periods
• Prioritize critical suppliers

Stakeholder Mapping

Goal: Maintain confidence while restructuring progresses.

Banking & Lender Engagement

First 30 Days — provide:

• Business status update
• Cash flow projections
• Revival roadmap

Seek Support:

• Moratorium
• Temporary covenant relief
• Additional working capital
• Restructuring discussions

Avoid: Surprises and delayed communication.

Customer Retention Strategy

Protect Revenue Base — questions:

• Which customers generate 80% of revenue?
• Which contracts are profitable?
• Which customers are at risk?

Immediate Actions:

• Senior management engagement
• Improve service levels
• Resolve complaints quickly

Employee Stabilisation

Employees are critical assets — distressed companies often lose key talent first.

Actions:

• Transparent communication
• Retention plans for critical staff
• Weekly leadership updates
• Address uncertainty

Objective: Retain institutional knowledge.

Day 31–60 – Business Diagnosis

Conduct Deep-Dive Assessment

Financial Review

• Profitability by product
• Profitability by customer
• Cost structure analysis

Operational Review

• Plant utilization
• Capacity efficiency
• Project execution performance

Strategic Review

• Competitive position
• Industry outlook
• Market attractiveness

Root Cause Analysis

Typical Root Causes

Financial:

• Excessive leverage
• Working capital mismanagement

Operational:

• Cost overruns
• Inefficient processes

Strategic:

• Wrong markets
• Poor pricing strategy

Governance:

• Weak controls
• Poor reporting

Quick Wins Identification

Focus on actions delivering results within 90 days:

• Vendor renegotiation
• Rent reductions
• Workforce optimisation
• Collection improvements
• Asset disposal
• Procurement savings

Impact: Immediate EBITDA and cash improvements.

Day 61–90 – Execute Recovery Actions

Revenue Enhancement

• Cross-selling
• Pricing corrections
• Focus on profitable customers

Cost Reduction

• Procurement savings
• Overhead rationalisation
• Outsourcing opportunities

Working Capital Improvement

• Faster collections
• Inventory optimisation

Turnaround Governance Structure

Weekly Turnaround Review — track:

• Cash position
• Sales performance
• Collections
• EBITDA
• Order book
• Project execution

Governance Committees:

• Board Oversight
• Steering Committee
• Turnaround Office

Turnaround KPIs

Financial KPIs

• Daily cash balance
• Weekly collections
• EBITDA
• Working capital days

Operational KPIs

• Capacity utilization
• On-time delivery
• Productivity

Commercial KPIs

• Order intake
• Customer retention
• Gross margin

Legal & Regulatory Considerations

Review Exposure

Companies Act — financial reporting obligations

Banking Covenants — compliance review

Tax Matters — GST, Income Tax, TDS

Labour Laws — employee obligations

Insolvency Risk — IBC exposure, default thresholds

Distressed M&A Opportunities

Evaluate Strategic Alternatives:

• Strategic investor
• Private equity infusion
• Asset sale
• Business carve-out
• Joint venture
• Debt restructuring

Objective: Strengthen balance sheet.

Turnaround Success Factors

What successful turnarounds have in common:

• Fast decision-making
• Reliable cash forecasting
• Transparent stakeholder communication
• Strong leadership
• Ruthless prioritisation
• Focus on liquidity first

Common Turnaround Mistakes

Avoid:

• Delaying difficult decisions
• Over-optimistic projections
• Ignoring cash flow
• Poor lender communication
• Retaining unprofitable activities
• Waiting for external funding

90-Day Deliverables

By Day 90 the company should have:

• Stable liquidity position
• Reliable MIS and reporting
• Stakeholder confidence restored
• Cost reduction initiatives underway
• Working capital improvement plan
• Strategic roadmap approved

The Turnaround Roadmap

Days 1–30: Stabilise → Days 31–60: Diagnose → Days 61–90: Execute Quick Wins → Months 4–12: Transform & Grow

Key Message: Turnarounds are won or lost in the first 90 days. Liquidity, leadership, discipline and speed determine survival.

Preserve Cash. Restore Confidence. Create Value.