Paul Thompson needs funds to support his plan to turnaround the Walker Insurance company. He is faced with problems, as he does not know where to start regarding resources acquisition.
- What are the unique characteristics of this business?
The company is in short of good leadership, and Paul must take immediate actions to strengthen the business’s moral by replacing the sales force, spending measures and reduction of the wages. Paul finds an issue of approximately $600k which forces the company to turn into the funds set aside for the emergency purpose. Paul is afraid to embark on the investors to facilitate the financial stability of his business. He has also considered selling the company to give returns for the investors and him. Thus the primary characteristic of this industry is that it is at the edge of the bankruptcy.
- How well has Thomson done in turning around Walker Insurance so far?
Walker has done his best in efforts to turnaround walker insurance. First, he has used all the money meant for emergency issues to fund the business project. Lastly, he has considered putting the company on sale to restructure the company and escape the challenges related to the building of a stronger sales force.
- What are the risks you see facing Thomson?
Thompson is facing some the risks. Some of these risks include losing the business and running bankrupt since at some point he is forced to use his money to fund the business projects and repay the debts. If he does not come up with a proper management plan and strategy, borrowing more money from the financial help would only increase the problems in the business.
- What should Thomson do now and why?
It is evident that Thompson did not foresee the problem that saw his company use all the $600k meant for the emergency purpose. This means that the corporation is in short of efficient management. Thus Thompson should employ a more capable workforce that will help him in budgeting the company’s financial resources. Moreover, Thompson should look for the best ways of cutting the production cost to save more money and fund other productive projects in the company. To avoid the company from running to bankruptcy ultimately, Thompson should consider settling all the debts he has to other investors. Later he should find the best sources of money by borrowing cash from the banks that offer the loans at lower interest rates and long periods of repayment so that he can buy time for the company growth. The other thing that could help is keeping good financial records that will contribute to foresee the possible financial business threats.