You haven't slept in three weeks. Your banker doesn't return your calls. L’URSSAF sent another letter. And yesterday, the workshop manager asked you if the wages would be paid at the end of the month. You said yes. You don't know if it's true.
Tens of thousands of French managers go through this situation every year. According to Altares' annual studies of business failures, tens of thousands of insolvency proceedings are opened in France, a significant proportion of which could have been avoided by an earlier response. The Banque de France and the Ministry of the Economy have been warning of the same thing for years: the delay between the first signals and the request for help is the number one factor in failure.
Saving a company in difficulty is rarely a question of financial genius. It's a question of method, timing and courage. Here are the three levers you need to pull first.
Why most managers react too late
The trap is psychological before it is financial. You are the manager. You created this company, or you took it over. The idea of admitting to a deteriorating situation seems like an admission of incompetence. So you wait. You dip into your personal account. You put off paying URSSAF month after month. You hope for a big contract that will solve everything at once.
The figures published regularly by the Banque de France and the Insolvency Observatory reveal one constant. Companies that activate a preventive procedure before the cessation of payments (ad hoc mandate, conciliation) have much higher survival rates than those that go straight into receivership.
In other words, saving a company in difficulty is still statistically possible, but only if you make a move while you still have room to manoeuvre. Once the coffers are empty and social security contributions have gone unpaid for six months, the options narrow dramatically.
Lever 1: regain absolute control of cash flow in 7 days
Before any strategy, you need oxygen. And a company's oxygen is its cash flow.
First action: draw up a 13-week forecast, week by week. Not by the month. By the week. At this stage, every single cash inflow and outflow counts. You need to know exactly, day by day, what your bank balance will be for the next three months.
Second action: freeze everything that is not vital to immediate production. Investment, recruitment, redundant software subscriptions, marketing costs with no measured ROI, travel. A temporary cut of 20 to 30 % in discretionary costs is generally achievable within a week.
Third action: go into aggressive collection mode. Call your biggest debtors personally. Offer discounts for immediate payment if necessary. Use factoring for healthy receivables as long as your file remains financeable.
Fourth action: negotiate with your strategic suppliers before they become distrustful. A supplier who has been warned almost always agrees to a deferment. A supplier surprised by an unpaid bill becomes a hostile creditor for a long time to come.
Saving a company in difficulty always starts with this iron discipline on cash. For the first few weeks, forget about strategy. Concentrate on liquidity.
Saving a company in difficulty
Lever 2: activate the right procedures before it's too late
French law offers powerful tools that managers make surprisingly little use of. These procedures are governed by the French Commercial Code, principally articles L611 et seq. for preventive procedures, and articles L620 et seq. for collective procedures.
If you are not yet insolvent, there are two confidential schemes available. The mandat ad hoc, appointed by the president of the commercial court at your request, enables a professional to help negotiate with your creditors, without advertising or informing your customers. Conciliation goes further, can secure agreements approved by the court, and also remains confidential vis-à-vis the market.
Even before these legal proceedings, there are two administrative committees that you should knock on without delay. The CCSF (Commission des Chefs de Services Financiers), which is present in every département, can defer your tax and social security debts (URSSAF, tax), usually for 24 to 36 months. CODEFI (Comité Départemental d'Examen des Problèmes de Financement des Entreprises), run by the government, coordinates support for companies in difficulty with fewer than 400 employees.
All these procedures are free or inexpensive in principle. Above all, they are confidential. Your customers and competitors will know nothing about them. This is exactly the opposite of a receivership, which becomes public as soon as it is opened by publication in the BODACC.
Saving a company in difficulty almost always involves one of these doors. But they gradually close as your cash flow dries up.
Lever 3: restructure the business model, not just costs
The classic mistake is to slash costs like a lumberjack, believing that you can save a company in difficulty simply by slimming down. Reducing costs without understanding why they have become too high is treating a symptom without treating the cause.
The real question is more uncomfortable. What is your real business model today? Which customers are making you money, which are losing you money? Which products or services are driving your margins, and which are silently diluting them? Which markets are growing, which are declining inexorably?
An analysis of customer profitability over the last 24 months often reveals some major surprises. Twenty per cent of customers frequently generate 80 % of the net margin. And some «large» customers in terms of volume actually destroy value, once their service requirements, discounts and payment terms have been added back into the calculation.
Saving a company in difficulty sometimes involves the counter-intuitive decision to voluntarily lose unprofitable sales. Concentrating resources on the profitable core is rarely popular internally. It is almost always effective in terms of results within six months.
Renegotiate your leases. Question your commercial partnerships. Review your pricing policy, which has often stood still for years while your purchasing costs have soared.
The most difficult decision, and the most liberating
Save a company It's never a solitary exercise. This is probably the hardest lesson for a manager who has been used to running his business alone for years.
Surround yourself. Right now. Your accountant, first of all, who needs to switch into crisis mode and agree to see you every week. A lawyer specialising in insolvency law, to map out your legal options. The clerk's office of your local commercial court, who will welcome managers free of charge as a preventive measure, without over-dramatising the situation.
The Business Ombudsman and the Credit Ombudsman (free public services, the latter coordinated by the Banque de France) are useful additions to this system, and can be contacted by filling in an online form.
Your company is not you. Its current difficulties are not a verdict on your worth as a manager. The sooner you agree to ask for help, the sooner you can give your business a real chance of survival and recovery.
