The hardest part of planning a company turnaround is recognising that you have problems, and that action needs to be taken to avoid a terminal decline. Once you have done this, anything is possible, however bad you believe the situation is.
I fully recognise that time is of the essence in these situations, so here is a quick self-help Turnaround Strategy checklist:
1. Take control of your cash flow
If the business is haemorrhaging cash, take action to stop it as soon as is possible. In saying this, try not to stop payments that will do damage to the value of your business or possibly incur fines or encourage a creditor to take action against you. These are all, of course, judgement calls.
2. Make sure you have the right team in place
It is crucial to the success of a turnaround plan that you have the right team in place. It may be that you need to bring in outside support from a turnaround specialist with experience of turning around their own businesses.
3. Change your business proposition
Make sure your offering is appropriate for current market conditions. Are you offering the market retail apples when your prospective customers are looking for oranges from an on line store? Try to give yourself some time away from the business, ideally with a trusted external party with experience of Company Turnarounds to look at the overall picture. Look at the broader economic and industry conditions and make sure that you are providing both what the market wants, and how it wants it!
4. Right size your costs
This is the time to reduce your overheads, to cut out the waste and to stop completely the nice to have, but not absolutely essential to the survival of the business. In terms of your people, lessons have been learnt in this recent downturn that businesses are better to reduce the time or salaries of employees than to lose key skills and capabilities forever!
5. Make sure you have the cash to finance your business turnaround
Even the very best plan will fail without the right level of Turnaround Finance. Carefully plan your cashflow over both the short term, say the next crucial 12 weeks, and the medium term, the next 12 months. You need to identify the most appropriate finance partners to work with you to restore the business to its former glory. This can be a mix of Turnaround debt and/or equity, and may necessitate the buying out of your existing funder if they are not prepared to fund the Turnaround. There are specialist providers of all these types of finance available in the market place.
6. Communicate your plan to key stakeholders
It is vital to the success of the Turnaround plan that it is communicated to all the key stakeholders and participants, where this is commercially possible. It will allay the fears of your staff to understand that you have recognised there have been problems and that you are being proactive in taking action to resolve these issues and turnaround the fortunes of the organisation. The same applies to other key stakeholders such as suppliers, customers, landlords and providers of finance.
Through good communication you can create a real mission out of the Turnaround and seek to pull all your people together to get behind the new strategy.
This is just a very quick self-help guide to what are invariably enormously complex situations. The best advice I can give from my own experience of both doing this for myself, and advising others, is that to work with a trusted external party who is absolutely on your side, with no other agenda than that of looking after your interests and preserving the value in the business, is incredibly valuable.
As always if you would like to comment on or discuss anything in thisarticle I can be contacted at email@example.com or on 0845 689 8750.
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