Business turnaround or Business transformation is like having your personal doctor or coach who help you when your body or mind needs healing or improving.
Emergency transformation
Business Turnaround
You go and see them when you feel unwell or you want to get to the next level of better performance. You take a course of treatment, recover and see them only for yearly check-ups or you get regular sessions with your coach and you introduce any recommendations your coach suggests.
Business turnaround consultants are business doctors and they are there for you when something is going wrong with your organization. When your business is in stagnation with low or decreasing profits, you need to implement a turnaround plan. And you need to do it quickly, because every week counts.
The good news is that with your full commitment you have 80% chance to be successful, to increase your business performance and enjoy running your business much more than before.
For businesses with quickly decreasing profits or no profits at all the solution is an emergency turnaround plan. It doesn’t need to be perfect – it
Saving your company from troubles is however business as usual. It happens on regular basis like recession and boom times and it should be treated as something natural. We can only prepare for that with the good systems and clever strategy.
Why do businesses fail? Your organizations are constantly faced with threats. Competitors create threats when they expand their market share quickly or initiate price wars that are unwinnable. New entrants or new substitutes disrupt your traditional ways of doing business and leave you confused. With time your performance decreases, you burn out, you loose motivation and loose ability and willingness to change and react to what is happening in your external environment. Usually the external environment doesn’t make you fail. It is your organization that fails at adapting.
To lower the cost of another turnaround you need to recognize danger signs. It might be difficult, because they may not be obvious and you don’t know how to read them, or you may read them, but might not do anything about it or do it much later when the recovery point falls beneath the failure line.
Use strategy tools and construct an early warning system. Improve the ability of the company to notice what happens internally and externally. Set up triggers to let you know when to respond. Embed them in your management processes and systems. Ask yourself whether you are growing too fast or to slow, how are your growing, are you sloppy with your expansion, are financial controls adequate, are there competitors that are more innovative, are they growing faster, what is your organization culture, what are social trends affecting demand for your products?
After you recognize threats you must respond it. The usual response is denial that stops anyone doing anything about it. The first person indicating a threat may be ignored or criticised. Next steps beyond denial are the easiest, most obvious, least creative steps: starting with something small, increasing control, reducing costs, things that will not effect the managers directly. If it doesn’t help they will try the same, but on a larger scale. Often businesses will avoid doing anything directly to adapt to the threat, even though that is exactly what needs to be done. During this time of holding to the status quo, good employees leave and the situation gets worse.
It seems difficult for the owners or top managers to accept the loss of face involved in admitting that their direction and implementation stopped working. It is also difficult for them to find different ways of running the business.
There are organizations that limp along strategically and operationally bringing enough profit to keep top management employed. In these cases only sudden shocks can tip the balance towards action.
There are some generic strategies for recovery: restructuring (changing top managers and culture), cost cutting (reduce expenses), selling assets (get rid of non-core items), change marketing and products (in defensive and offensive way try to increase demand) and repositioning (new markets and customers). But you usually use some of them and not at the same time or not at the beginning. It all depends on business circumstances.
To be successful in business turnaround you need to have an open and honest discussion, differentiate between the old behaviours that lead you to the present situation and new behaviours that might save your organization. Resist the temptation to diversify – focus instead and bring clarity. Deal with financial issues to survive in the short term. Improve your top and middle management or let some of them go. Improve marketing and innovation. Understand your customers and create smarter, more valuable products.
Look first at the company’s value proposition. Check whether it is matching a great product or service. Check all aspect of customer experience starting with marketing, enquiries, sales, packaging, and ending with delivery, the way products or services are used and the way your customer can contact you. Develop right team skills and engage them in the change process. Hire a rock star HR manager and review existing strategy. Get clarity about where do we compete and how to win. Improve the execution process, implement leading and lagging KPIs to all levels of organization and take care of your cash management.
Before you do all of that, try to analyse the past and present situation of the organization, take inventory of your business by using a SWOT analysis where you write down your strengths, weaknesses, opportunities and threats. You can also use other strategy tools if you see the reason for that. Next thing you do is simplify your profit and loss statement and make yourself fluent in understanding it.
A business needs to survive financially long enough to have time to be treated and to recover. In order to achieve it you need to buy it some time first by determining and extending a cash runway. In emergency situations cash is most important. The more cash runway you have, the more time you have to fix the problem. The cash flow forecast is a handy tool to predict and control the time the company is able to survive. To increase your cash position you might work with your vendors to slow down accounts payable, with your clients to collect accounts receivable faster, you might want to liquidate to get rid of lower performing products, or you might take a short term loan.
Next step is dealing with your profit by cutting costs, optimizing revenues and simplifying your business. Add a pinch of patience and on average your business will be overhauled and modernized within 6 to 24 months.
Emergency transformation
Business Turnaround
Business turnaround or Business Transformation is like having your personal doctor or coach who help you when your body or mind needs healing or improving.
You go and see them when you feel unwell or you want to get to the next level of better performance. You take a course of treatment, recover and see them only for yearly check-ups or you get regular sessions with your coach and you introduce any recommendations your coach suggests.
Business turnaround consultants are business doctors and they are there for you when something is going wrong with your organization. When your business is in stagnation with low or decreasing profits, you need to implement a turnaround plan. And you need to do it quickly, because every week counts.
The good news is that with your full commitment you have 80% chance to be successful, to increase your business performance and enjoy running your business much more than before.
For businesses with quickly decreasing profits or no profits at all the solution is an emergency turnaround plan. It doesn’t need to be perfect – it
needs to be delivered and implemented quckly, without any delay.
Saving your company from troubles is however business as usual. It happens on regular basis like recession and boom times and it should be treated as something natural. We can only prepare for that with the good systems and clever strategy.
Why do businesses fail? Your organizations are constantly faced with threats. Competitors create threats when they expand their market share quickly or initiate price wars that are unwinnable. New entrants or new substitutes disrupt your traditional ways of doing business and leave you confused. With time your performance decreases, you burn out, you loose motivation and loose ability and willingness to change and react to what is happening in your external environment. Usually the external environment doesn’t make you fail. It is your organization that fails at adapting.
To lower the cost of another turnaround you need to recognize danger signs. It might be difficult, because they may not be obvious and you don’t know how to read them, or you may read them, but might not do anything about it or do it much later when the recovery point falls beneath the failure line.
Use strategy tools and construct an early warning system. Improve the ability of the company to notice what happens internally and externally. Set up triggers to let you know when to respond. Embed them in your management processes and systems. Ask yourself whether you are growing too fast or to slow, how are your growing, are you sloppy with your expansion, are financial controls adequate, are there competitors that are more innovative, are they growing faster, what is your organization culture, what are social trends affecting demand for your products?
After you recognize threats you must respond it. The usual response is denial that stops anyone doing anything about it. The first person indicating a threat may be ignored or criticised. Next steps beyond denial are the easiest, most obvious, least creative steps: starting with something small, increasing control, reducing costs, things that will not effect the managers directly. If it doesn’t help they will try the same, but on a larger scale. Often businesses will avoid doing anything directly to adapt to the threat, even though that is exactly what needs to be done. During this time of holding to the status quo, good employees leave and the situation gets worse.
It seems difficult for the owners or top managers to accept the loss of face involved in admitting that their direction and implementation stopped working. It is also difficult for them to find different ways of running the business.
There are organizations that limp along strategically and operationally bringing enough profit to keep top management employed. In these cases only sudden shocks can tip the balance towards action.
There are some generic strategies for recovery: restructuring (changing top managers and culture), cost cutting (reduce expenses), selling assets (get rid of non-core items), change marketing and products (in defensive and offensive way try to increase demand) and repositioning (new markets and customers). But you usually use some of them and not at the same time or not at the beginning. It all depends on business circumstances.
To be successful in business turnaround you need to have an open and honest discussion, differentiate between the old behaviours that lead you to the present situation and new behaviours that might save your organization. Resist the temptation to diversify – focus instead and bring clarity. Deal with financial issues to survive in the short term. Improve your top and middle management or let some of them go. Improve marketing and innovation. Understand your customers and create smarter, more valuable products.
Look first at the company’s value proposition. Check whether it is matching a great product or service. Check all aspect of customer experience starting with marketing, enquiries, sales, packaging, and ending with delivery, the way products or services are used and the way your customer can contact you. Develop right team skills and engage them in the change process. Hire a rock star HR manager and review existing strategy. Get clarity about where do we compete and how to win. Improve the execution process, implement leading and lagging KPIs to all levels of organization and take care of your cash management.
Before you do all of that, try to analyse the past and present situation of the organization, take inventory of your business by using a SWOT analysis where you write down your strengths, weaknesses, opportunities and threats. You can also use other strategy tools if you see the reason for that. Next thing you do is simplify your profit and loss statement and make yourself fluent in understanding it.
A business needs to survive financially long enough to have time to be treated and to recover. In order to achieve it you need to buy it some time first by determining and extending a cash runway. In emergency situations cash is most important. The more cash runway you have, the more time you have to fix the problem. The cash flow forecast is a handy tool to predict and control the time the company is able to survive. To increase your cash position you might work with your vendors to slow down accounts payable, with your clients to collect accounts receivable faster, you might want to liquidate to get rid of lower performing products, or you might take a short term loan.
Next step is dealing with your profit by cutting costs, optimizing revenues and simplifying your business. Add a pinch of patience and on average your business will be overhauled and modernized within 6 to 24 months.