K2's Turnaround Update | Edition 3

Welcome to K2’s September 2022 Turnaround Update

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In this newsletter:

• Business ownership is a lonely climb without the right support???
• Turnaround often?ignore the elephant in the room: owners at breaking point???
• Mixed messages on the state of the construction industry are a sign of the times????

As the summer comes to a close, businesses are reckoning with an increasingly turbulent trading environment.

The war in Ukraine drags on and is having a devastating effect across the world. Here in the UK, energy prices have sky rocketed and had knock on effects on the price of goods and services. This is on top of the disruption of the last two years we have already suffered to the supply chain because of Covid.

The fear about the coming winter is ratcheting up, prompting a wave of strikes in the UK by workers worried about their finances.

With all this to contend with, I have decided to focus on mental health in the coming weeks and months. Specifically on despair and the far-reaching effects that dangerous leaders can have, both nationally and globally, on businesses’ ability to survive and prosper.

First, have a read of our Guide to dangerous leaders which you can find here.

Business ownership is lonely climb without the right support

Being the boss of a business can be a lonely place, especially when times are as tough as they currently are.

The temptation is to present a positive front and mask the worries for the reassurance of colleagues and staff.

But the stress of this can take a huge mental toll.

Business owners under stress are often in denial about their mental health. Family, friends and colleagues can help spot the signs and encourage them to get help.

Some signs to look out for include out for are:

• Are they increasingly short-tempered?
• Are they always exhausted?
• Losing concentration?
• Putting off decisions?
• Anxious?
• Showing erratic behaviour?

Being supportive, sympathetic and encouraging is obviously important but so is encouraging the person to get help.

Seeking the help of a mental health professional should always be the first consideration, especially in severe cases.?

However experience has taught me that getting support from others who they can trust to handle some of their responsibilities, take some of the pressure off them and allow them to focus on themselves more can also be a valuable part of the picture.

As well as the total demands of running the business, owner’s mental health is often closely tied to the health of their business.?

Addressing both these issues us something??K2 specialises in and speaks to why the company is called K2 in the first place. K2 is widely regarded as the hardest mountain to climb in the world and so the parallels to business success are evident. It’s not a mountain that can be climbed without the support of trusted team, even less so when someone has been struggling for a while and exhaustion is starting to set in.

If you know anyone who might from a having a support line to help take some of the pressure off or benefit from an outsiders perspective on their business, please do get in touch.?

Turnaround often ignores the elephant in the room: owners at breaking point

It ignores owners and the catastrophic effect that feeling out of control can have on their mental health.

This is a topic that as a certified turnaround practitioner I have been acutely aware of for years, especially given the boundary of not straying into personal matters. But given the subject matter it is one that is rarely discussed and I think this ought to change.

The inspiration for this post came from my recent meeting with a client during which he divulged the extent of the stress he had been under trying to keep all the plates spinning.?

The problems he faced spanned across his business and personal life and he lived in perpetual worry that he would lose his business, his livelihood, his house, and his family.?

His concerns were justified as he had put up his house as collateral security to a bank, provided personal guarantees to other lenders and he hadn’t told his wife about the company’s precarious financial situation.

On top of this, he was dealing with two banks, a number of secondary lenders and several suppliers chasing him for money. Meeting payroll was becoming more difficult every month. And he hadn’t paid himself for months.

The pressure had been building up over several years and he was reaching breaking point.?

The cauldron of negative emotions he faced had become so severe that thought of suicide had crossed his mind as an escape.

Unfortunately this is not the first time I’ve had such a conversation and I am sure it won’t be the last.

Mixed messages on the state of the construction industry are a sign of the times

UK housebuilding activity has returned to pre-pandemic levels, according to industry body, the National House Building Council (NHBC).

This sounds like the construction industry should be doing brilliantly and yet two other recent pieces of news tell a very different story:

(1) The number of construction firms seeking help from restructuring experts as builders struggle with the soaring cost of materials.

(2) The number of companies in "critical financial distress" has increased by 37% in the past year according to insolvency specialists Begbies Traynor warn and with construction groups among the hardest hit.

Could all these reports be true simultaneously?

Of course they can, given the financial crisis currently affecting the UK economy.

Furthermore, it’s likely that many industries, not only construction, are being hit by this paradox.

It is not looking as though things will get better any time soon, and the stress and strain this puts on the mental health of CEOs, business owners and boards is considerable.

Our message is: look after your mental health whether it is taking time out for a walk in nature or talking to someone about your worries.

K2's Cash Management Tool

FREE DOWNLOAD

This tool is designed to assist in managing cash on a weekly basis by enabling you to plot your expected cash in and outflows, and then adjust them to manage your cash position.

It’s primary function is to ensure you mange cash in a way the prioritises payments for those vital supplies needed to trade so you can generate invoices and get paid.

About the Author?

Tony Groom?is a turnaround and?restructuring professional with?K2 Business Partners,?a firm that invests in companies that have committed boards and assets that others find difficult to value.???

“As a turnaround investor, I back Directors of industrial and manufacturing companies who are facing a crisis. I bring an understanding of business as a Director and Shareholder of the many businesses and turnarounds that I have helped make successful.”??

About K2 Business Partners??

K2 Business Partners?are a small team of turnaround investors who put their money where their mouth is by backing directors and companies with ￡3m-￡20m turnover with assets that other investors find difficult to value.??

K2 don’t generally sell out and are in it for the long haul!?

Contact us if you’d like to know more about our investment process and to book a free strategy and viability review.