Business Turnaround Planning
Japanese Start-up
Introduction
This project was not a dramatic transformation.
However, by beginning with organizing the books and visualizing the foundation of management, the company’s turnaround steadily took shape.
It was a project that reaffirmed a simple truth: putting numbers in order is, in itself, rebuilding management.
Background — The Limits of Management Without Visibility into Numbers
This project involved a mid-sized venture company operating in Tokyo.
Due to a sharp decline in revenue, the company was facing severe cash flow constraints, and negotiations with banks had stalled.
As is often the case with small and mid-sized enterprises, bookkeeping and financial statements were not fully organized.
Many management decisions were made based on the long-standing experience and intuition of the CEO and executives, and cash flow statements and profitability simulations were not sufficiently maintained.
While decisions could be made without detailed numerical visibility during periods of ample liquidity,
once cash began to diminish, it became impossible to clearly identify where the problems lay.
Our role was to bring the company back to “management driven by visible numbers.”
The First Step — Visualizing the Financial Situation
The first initiative was to visualize the financial situation.
However, documents were not well organized, and financial statements varied in format year by year.
We conducted careful interviews with accounting staff, the owner, and the external tax advisor, gathering fragmented information piece by piece.
At times, we extracted figures from stacks of receipts and Excel sheets, consolidating them into a single cash flow statement that reflected reality.
Through this process, we visualized “where money was spent and how much remained,” and for the first time presented a clear numerical picture of the company’s current position to management.
Formulating a Turnaround Plan — Defining Realistic Borrowing and Repayment Lines
Once the full financial picture was clarified, we moved to develop a turnaround plan.
By aligning current cash flow with future revenue projections,
we jointly examined “when and how much to borrow” and “what repayment pace would be realistic.”
We prepared negotiation materials for banks and presented multiple post-financing simulation scenarios.
Rather than proposing short-term survival measures, we positioned the financing proposal around mid-term financial stabilization, gaining the understanding of financial institutions.
Revisiting Cost Structure — Deciding What to Cut and What to Preserve
The next step was a thorough review of costs.
We examined expense details one by one and identified areas for potential reduction.
Difficult decisions—such as reducing personnel costs and executive compensation—were unavoidable.
However, by carefully explaining the necessity based on data and aligning with management on the long-term sustainability objective,
we clarified that this was not merely “cost cutting,” but a “reallocation of resources to invest in the future.”
At the same time, areas directly linked to revenue growth—such as sales activities and digital transformation—were strengthened.
We rigorously implemented a strategy of focus and prioritization: cutting where necessary, investing where essential.
Signs of Recovery — A Shift Toward Management Guided by Numbers
Several months after implementation, the financial situation steadily improved.
With clear visibility into cash flow and real-time awareness of liquidity status,
the speed and accuracy of management decisions improved dramatically.
Additional bank financing was successfully secured, stabilizing cash flow.
Within management, a culture of “making decisions based on numbers” gradually began to take root.
Reflections from This Project
The essence of business turnaround may not lie in cost reduction or loan negotiations,
but in enabling management to speak about their company’s numbers “in their own words.”
We began with financial visualization as the first step.
When numbers are organized, issues become visible. When issues are visible, decisions can be made.
And when decisions can be made, a future plan can be drawn.
This project reinforced our belief that steady, incremental steps like these ultimately lead to corporate revival.
