How to take a company from red to black

When the numbers turn red, you feel it before you see it. The office grows quieter. Conversations stop when you walk by. Suppliers begin asking for payment upfront, and employees update their LinkedIn profiles after hours. This is what a company in crisis looks like: not just bleeding spreadsheets but real people facing real uncertainty.

I have watched businesses fight their way back from the brink, and there is no magic formula. Instead, it is a series of hard choices that test everyone involved.

The first fight is always about cutting costs. Every expense gets scrutinised. That unused software subscription? Gone. The expensive office space? Time for something smaller. But here is where leaders make or break their companies: they either panic and cut everything, or they cut strategically. I have seen chief executives slash marketing budgets to zero, only to watch their sales pipeline dry up six months later. The companies that survive know the difference between fat and muscle. They protect what drives revenue, even when it hurts to spend money they do not have.

While cutting costs, you also scramble for every penny. You call customers who owe you money, sometimes swallowing your pride to ask when that overdue invoice might be paid. You negotiate with suppliers for an extra 15 days while promising you are good for it. I have watched business owners personally deliver products to speed up payments or work weekends in their warehouses to avoid hiring help.

Then comes the bigger question: borrow more money or sell part of your company to investors? Debt feels cleaner because you keep control, but monthly payments can strangle you when cash is tight. Bringing in investors means giving up ownership, but it can give you breathing space to actually fix the business. The smartest leaders choose the option that gives them time to recover, not just a quick fix.

None of these matters if your best people leave. When word spreads that your company is struggling, recruiters start circling. Keeping talent during tough times is not about retention bonuses you cannot afford. It is about brutal honesty combined with genuine respect. People can handle bad news if you tell them straight. What they cannot handle is being misled.

Turning a company around is not about motivational speeches. It is about sleepless nights reviewing cash flow projections. It is sitting across from your banker, explaining why this month will be different. It is looking your team in the eye and asking them to believe in something that feels uncertain.

When the numbers finally turn from red to black, the victory is not just financial. It is proof that a group of people refused to give up on something they believed in. That is what real business turnarounds look like: not just better numbers but better people who proved they could handle whatever comes next.

Readers may assume I have a story of corporate America in mind. But what happens if you want to turn a local company from red to black? Much depends on the character of the owners or promoters, their management behaviour and expertise, and clear communication with wider stakeholders. Support from financiers is also critical.

If the company is majority state-owned and loss-making, you are looking at a complete overhaul. Bring in capable people and professional directors, instil confidence in staff, optimise costs and resources, promote core businesses and shed tail-end operations without fuelling unrest. Senior staff used to one style of management, and those performing below average will resist change and may try to block success or damage reputations.

You therefore need a committed, hands-on board that stands behind change and optimisation, and above all, shows courage. Owners must unite to encourage the change-drivers, regulators should keep their cool, and financiers should offer steady support.

The writer is an economic analyst and chairman at Financial Excellence Ltd