It’s 6:00 a.m. on a Monday. You wake up dreading going to work - although you’re the founder and major shareholder of the company - and it’s almost impossible to get out of bed.

Your stomach has been in knots for months. It’s difficult to focus on even the smallest task. Your mind keeps wandering to the ugly reality you can’t admit to anyone (even yourself): Your company is in a death spiral and you don’t know how to stop it.

You know how it started, though. When the economy went soft, sales started falling. Then a well-funded competitor introduced a new product that made your star product obsolete. Sales plunged even more. The company began missing its budget and is now several months behind on paying bills. Creditors are threatening to sue. Vendors aren’t shipping parts unless paid C.O.D. Manufacturing can’t complete open orders. Customers are canceling new orders because delivery dates are being pushed back. Salespeople are frustrated and are leaving because they’re not being paid commissions or being reimbursed for business expenses. Employees are nervous, and you suspect a lot of resumes are hitting the street.

This morning, you’re mostly worried about making payroll next Friday. You know you don’t have enough cash to cover it and you’re maxed out on your bank loan. The bank has given notice of loan covenant defaults. You have 45 days to cure the defaults or pay off the loan. You expect to be in trouble with the IRS before long because the company has fallen behind in its payroll tax responsibilities.

Because of all the fires you’re putting out, you’ve been working 70-80 hours a week - and still can’t keep up. Entrepreneurial spirit has been replaced by fear that the end is near. Your personal assets, which you pledged in order to get the bank loan, are at risk. This is unbeknownst to your spouse, who has been expressing concern for your health, your marriage, your nonexistent relationship with the kids, and an empty social life. Your once successful dream business has become your worst nightmare.

Unfortunately, this story may sound familiar to many managers right now. Bank loan defaults become more common during economic downturns, and most managers today don’t have experience managing through a financial crisis. Most practice what I call “denoidance”: a combination of denial and avoidance. They don’t want to admit to the problem, so if they act as though, if they avoid creditors, vendors, bankers, their own management team, spouses, children, and friends, the problem will disappear.

If this is you, snap out of it! Denial is not just a river in Egypt! Rearranging the facts to fit your reality won’t fix the company or ease your pain. Get started right now on fixing your company. Inaction will result in bankruptcy or liquidation. On the contrary, if you get the crisis under control, it’s possible the company can be saved.

There’s no time for analysis paralysis, so you must quickly determine what’s at the root of the problem to decide whether the company has a chance of being saved. Is it external factors, like a small niche market that can’t support a growing company like yours, or an overall industry downturn? Is it competitors who are better positioned and better funded? Is it a consolidating market that is pushing down prices and profit margins? Is it changing demographics in the market or new social, governmental, or technological issues? If the primary reason for distress is external factors that you cannot overcome, then perhaps you should discuss voluntary surrender of assets with your secured lender.

However, if the answer is that you can overcome the external factors, then look in the mirror. Common internal factors of troubled businesses are:

• Operating without a solid business plan;
• Reacting late or poorly to market changes;
• Operating without sufficient controls;
• Growing too fast;
• Diversifying too much;
• Managing without delegating or the right experience;
• Relying on internal growth to finance new projects.

Internal problems can be brought under control and fixed. If you are experiencing internal problems, you might have a business worth salvaging and restoring to profitability.

Now get started on that fix. If you are worn out from operating in the eye of the storm or are too close to it to be objective, get outside help. You may want to hire a turnaround specialist to assist you. These are professionals who have experience in crisis management, securing financing and refinancing, and dealing with banks, creditors, and vendors. Turnaround specialists can be found on the Internet by searching under “turnaround management” or “crisis management.”

Before you consider hiring a turnaround specialist, conduct a review of basic information to pinpoint the major areas of concern. If you believe your own numbers, analyze current financial statements (gross margins, net income, EBIT, EBITDA, product profitability). Review cash flow statements, accounts receivable reports, inventory status reports, creditor problems, marketing plans, operational controls and internal reporting systems, organizational and management structure, abilities of management and board members to manage in a crisis, and problems in legal, accounting, regulatory, or disclosure areas. Be sure to understand key value drivers and value eroders in your business.

Armed with this information, along with your management team, develop a comprehensive turnaround plan that addresses short-range business issues and long-term strategic issues. No turnaround can be successful without a solid action plan that the company’s constituent groups can support. It must demonstrate to management and employees, customers, financial institutions, creditors, shareholders, and regulatory agencies that your business has the potential to survive and succeed.

The plan should include marketing strategies; projects to adjust selling, administrative, and operational expenses with revised financial projections; plans to restructure existing liabilities and manage assets; organizational charts including specific responsibilities and authority; a pro forma balance sheet, profit and loss statement, and cash flow projections for the next few years; and supporting forecasting assumptions. It should focus your attention on daily critical issues and provide adequate attention to the core business.

Simultaneously, you must focus on maximizing internal cash flow. In a crisis situation, every day must be managed according to what cash is coming in and what has to go out. This is where you buy time. Run projected cash flows daily for the next two weeks and weekly for the next two months. Then find ways to squeeze out cash, like stretching out or restructuring accounts payables, selling surplus inventory, reducing accounts receivables, selling fixed assets, consolidating facilities, making product or price changes, and being ruthless about reducing expenses.

To manage through a crisis, you will need new management information that is timely and meaningful that allows you to make important decisions relating to your critical issues. In addition to cash flow reports, be sure to have daily control over purchasing, inventory and operations; sales and billing; credit and collections; and special reports on key indicators relating to your business.

Armed with this new information, you can determine your ability to pay off debt. Most likely, trade creditor debt will have to be restructured. Along with qualified legal counsel, develop a creditor plan that may include extended payments, waiver and/or deferral of interest charges, conversion of debt from short-term to long-term or to equity, cancellation of debt, and exchange of debt for assets.

The turnaround plan is destined to fail unless you get out of your “denoidance” shell and communicate well with the bank, management, employees, customers, and vendors. No one will support a plan that they don’t understand or feel engaged in. Give weekly progress reports, being specific about short-term critical issues that are being fixed and who is responsible for what. Get everyone focused on executing the turnaround plan.

If you’ve been able to get this far, congratulations. You have taken the crucial steps to turn your company around and have begun to realize the upside of down. Stop working unreasonable hours and devote more time to your spouse, family, and friends. Allow your body to catch up with your mind. Work smarter, not harder, and have sweet dreams. Nighty-night.