How Shena White Approaches Financial Recovery for Struggling Businesses

A business can generate substantial revenue and still struggle to remain profitable. Rising supplier costs, underpriced services, inefficient operations, and poor cash flow management can gradually weaken a company's financial position.

When losses accumulate, business owners may assume that additional funding or higher sales are the only ways forward. However, understanding where money is being lost can be an equally important first step.

Shena White, founder of Pretty Smart Busponsiness and Your Pocket CFO, has experienced a financial crisis firsthand. Her experience provides a starting point for examining a broader business challenge: how can owners identify the financial problems putting their companies at risk and decide which issues to address first?

Financial recovery often requires a closer examination of costs, cash flow, and operational decisions before committing to additional spending.

Financial Crisis Requires Immediate Priorities

Twelve years ago, Shena White discovered that her accountant had embezzled money intended for tax payments. The situation exposed her business assets to potential claims from the Internal Revenue Service (IRS), placing her livelihood at risk while she was caring for two young children.

The experience illustrates a challenge many business owners face during a financial emergency: making critical decisions with limited time and resources.

When financial problems threaten a company's stability, understanding the full extent of its obligations becomes essential. Owners need to know how much cash is available, which payments are approaching, and how long the business can continue operating at its current spending rate. Tax obligations, payroll, supplier invoices, and outstanding debts may require different levels of urgency.

A financial setback can also highlight the importance of accurate records and regular oversight. Reviewing financial statements, reconciling accounts, and monitoring outstanding obligations can help business owners identify discrepancies and make decisions based on a clearer picture of their company's position.

The objective is to distinguish immediate survival risks from longer-term improvements. Cutting expenses without understanding their consequences can create additional problems. Reducing marketing may limit future sales, while understaffing can affect service quality and customer retention. Effective recovery requires identifying which expenses can be reduced without undermining the business's ability to generate income.

Finding the Source of Profitability Problems

When a business is struggling, it is tempting to address every issue at once. A more practical approach is to identify the factors having the greatest financial impact.

A profit and loss statement provides a useful starting point. Business owners can examine revenue, direct costs, payroll, overhead, and operating profit to determine where the largest gaps exist between expectations and actual performance.

For a construction company, materials, subcontractors, and equipment rentals may account for a significant share of expenses. For a consultancy or other service business, the problem may involve underpricing, excessive hours spent on particular clients, or too much time devoted to administrative work.

Consider a contractor whose direct costs consume 85% of revenue. The remaining 15% must cover overhead and other operating expenses before the business can generate a profit. If those additional expenses exceed the amount remaining, the company may operate at a loss despite generating substantial sales.

Negotiating supplier agreements, reducing material waste, reviewing project estimates, or adjusting pricing may offer more meaningful improvements than making small cuts across unrelated expenses.

For business owners assessing financial difficulties, the important question is not simply how much the company earns, but whether its revenue adequately covers the costs of delivering its products or services and running the business. Before changing a process, owners should establish a baseline, identify the expected benefit, and measure the results after implementation.

Making Direct Costs Easier to Manage

In construction and other materials-based industries, costs can vary significantly between projects. A single expense category may conceal differences in material prices, subcontractor rates, equipment use, and purchasing efficiency.

Examining these costs individually can help reveal where spending differs from the original budget and where corrective action may be possible. A company can begin by ranking its three largest direct expense categories by total spending. Management can then review supplier pricing, compare estimates with actual project costs, investigate waste, and assess whether equipment rental arrangements remain economical.

Industry benchmarks may provide a useful reference, but they should not be treated as universal targets. Appropriate cost ratios depend on the company's services, location, contract structure, and operating model.

Regular monitoring is essential. Reviewing costs weekly during a period of financial pressure can help owners detect unfavourable trends before they become more difficult to correct. It also creates an opportunity to determine whether a change has delivered the expected savings or simply shifted costs elsewhere.

Improving Efficiency Without Additional Funding

When cash is limited, improving how existing resources are used may be more practical than immediately seeking outside capital.

One useful exercise is to review business activities through four questions: What can be automated? What can be delegated? What should be discontinued? And which responsibilities genuinely require the owner's direct attention?

Automating invoicing, payment reminders, and appointment scheduling can reduce repetitive administrative work. Delegating bookkeeping or routine customer enquiries may allow owners to concentrate on decisions that require their expertise.

Discontinuing an unprofitable service or renegotiating a costly customer arrangement can also improve margins, provided the decision accounts for contractual commitments and potential effects on other revenue streams.

These decisions require careful analysis. A customer generating substantial revenue may still be unprofitable if the cost of servicing the account is too high. Conversely, eliminating a service based solely on short-term performance may remove an important source of future growth.

The goal is to understand which activities consume resources and which contribute to the company's financial sustainability. Rather than cutting expenses indiscriminately, owners can use this assessment to direct time, money, and staff toward activities that support the business's operating needs and longer-term objectives.

Building a Sustainable Recovery Plan

Financial recovery generally requires several stages. First, stabilise cash flow and address urgent obligations. Next, correct the most significant problems affecting profitability. Then establish consistent reporting and operational processes to help prevent the same issues from recurring.

Business owners should track a small set of meaningful indicators, such as available cash, gross margin, overdue receivables, and operating profit. These measures provide a clearer view of whether the business is improving than revenue alone.

Recovery timelines will vary according to the severity of the financial problems, market conditions, and management's ability to implement changes. Some issues can be addressed quickly, while others require contract renegotiations, operational restructuring, or professional financial and legal advice.

White's experience with financial adversity provides a personal context for the challenges business owners face when their financial stability is threatened. More broadly, her story illustrates why understanding a company's financial position matters when deciding how to respond to a crisis.

For struggling businesses, recovery begins with identifying the source of financial pressure and prioritising the problems that have the greatest impact. A clearer understanding of cash flow, costs, and operating performance can help owners make more informed decisions about stabilising their companies and building a more sustainable financial foundation.