Over the years I have developed a number of Turnaround strategies, both for my own businesses and when supporting and advising others. What I learnt fairly early on was that it makes a significant difference to the success of the plan if you put in some ground work first.
Of course, it’s tempting to skip this phase because, in times of crisis, time is of the essence. But taking the time to take a step back to analyse your position can make or break your turnaround and indeed the future of your business.
The first thing to do is get a handle on the basics, in terms of managing cash flow and costs. Following that, you need to scrutinise your business as follows:
1. Review market positioning
Good businesses establish where they want to be in their market, and base their business strategy and communications around this. It then becomes a self-fulfilling prophecy, with the brand telling both customers and staff exactly what they are offering.
When planning a turnaround, it is a good time to re-evaluate this positioning and to ask yourself if you are truly providing what today’s customers want?
- What do my customers want? Is it Quality, Service, Price or a combination?
- What do my potential customers want? Look at it from their perspective.
- What are we providing? Ask your customers.
- What does your staff think you are providing? Ask them.
- What does your brand say you are providing? Ask someone NOT involved with the business and/or ask a user of a competitor’s product or service.
- What do you make money at providing? Ask your accountant.
- What do you have the resources and capabilities to provide? Carry out a Resource audit.
2. Review the external factors that affect the current business model
The world is changing by the day. Technology moves ever faster, with global communication meaning that individuals (Fred Goodwin), businesses (BP, G4S, Facebook) and even governments (Arab Spring) can rise and fall in the blink of an eye.
It is worth taking the time to examine the external environment before you complete your final Turnaround strategy. Look at the following five factors to see how each of them affects your company’s product and market – both now and in the future:
- Sociological factors: Your customers may be coming increasingly reliant on Social Media for information, for example. How is your business responding to that?
- Technological factors: Can your business compete when ever-faster and more mobile technologies are in use?
- Economic factors: With growth difficult to come by, the future remains uncertain. Banks are being ultra-cautious with their lending. Business funding is available, but only for credible business plans backed by credible people. Would your organisation qualify?
- Environmental factors: Are you on the right side of the environmental debate? These issues seem to have taken a bit of a back seat due to the financial crisis, but there are still examples of how they can adversely affect business. Just ask providers of plastic bags to supermarkets.
- Political factors: Even if you don’t operate in the public sector, you are reliant upon governmental decisions in areas of regulation and tax policy. And if your market extends beyond UK borders, things can get really complicated; more than ten different governments have fallen in Europe alone since the financial crisis of 2008.
The positioning analysis and the review of the external environment can give you insights into not only the development of your market proposition, but also the way that customers might like to buy from you and the sort of relationship they expect post purchase.
This sense checking methodology can give you the information you need to create a profitable and sustainable business management strategy for the future.
We’ve looked at several of the issues surrounding business management and turnaround strategies in our eGuide, “Company Turnaround and Refinance”. It’s designed to be a “one stop shop” for the kind of information you need, with expert and impartial advice for anyone with an underperforming business who is considering turnaround and/or refinancing options.
It’s written by a businessman, for businessmen who want to stay in control, preserve value, and get their business back to where they want it to be.
I would be interested to hear of any of your experiences or ideas about how to get the crucial first steps of a turnaround strategy right.
Image by:ecstaticist