Rescue Your Business With A Turnaround Plan
It has never been easy to own and manage a successful business but as the economic prospects look to be getting much nastier, it can only become harder.
If your business is in financial difficulty, you need to put together a turnaround plan.
What Is A Business Turnaround?
It is a focused project to turnaround the financial performance of your business from losses to profit by recognising and correcting the underlying causes of poor performance.
The business turnaround can be done by:
1 - You as the business owner if you learn the skills required to turnaround your business and you are prepared to challenge your own previous decisions and assumptions.
2 - A professional business turnaround expert who will knock your business into shape. This person will be appointed to effectively act as the CEO and will make the painful decisions necessary to rescue your business and meet your predefined goals. When the project is finished and the business is restored to profitability, the turnaround professional leaves. These business turnaround experts are sometimes known as "company doctors" because they fix unhealthy companies.
3 - The business is rescued through an insolvency procedure which provides protection from actions taken by creditors eager to recover their money.
The first option is the best provided you are prepared to take the tough decisions.
The business turnaround can be done by:
1 - You as the business owner if you learn the skills required to turnaround your business and you are prepared to challenge your own previous decisions and assumptions.
2 - A professional business turnaround expert who will knock your business into shape. This person will be appointed to effectively act as the CEO and will make the painful decisions necessary to rescue your business and meet your predefined goals. When the project is finished and the business is restored to profitability, the turnaround professional leaves. These business turnaround experts are sometimes known as "company doctors" because they fix unhealthy companies.
3 - The business is rescued through an insolvency procedure which provides protection from actions taken by creditors eager to recover their money.
The first option is the best provided you are prepared to take the tough decisions.
The Causes Of Business Failure
The intention is to help you to turnaround your business during the early stages of decline but if the problems continue to get worse, the future of the business may be seriously threatened.
Business failure statistics for small businesses are very high with many quoting statistics that 80% of small businesses fail within their first five years of trading.
Below is a link which examines the causes of financial distress and business failure. These need to be reversed during the business turnaround.
Business failure statistics for small businesses are very high with many quoting statistics that 80% of small businesses fail within their first five years of trading.
Below is a link which examines the causes of financial distress and business failure. These need to be reversed during the business turnaround.
- Business Financial Distress
- This link examines the common causes of financial distress and looks at what happens during the decline phase.
The Business Turnaround Process
The business turnaround process usually requires big changes in the business to first stop the decline and drain of cash and then to build the business back to profitability.
- Secure the support of stakeholders. You need your customers, suppliers and bank to support the turnaround process.
- Analyse the business and accurately diagnose the underlying problems.
- Consider options and put together an action plan to move the business forward.
- Communicate with staff, explain what is happening and involve your employees in the business turnaround action plan.
- Implement the business turnaround plan, monitor progress and report back to the stakeholders.
- When the turnaround is complete, continue with the good management practices introduced to ensure the business avoids problems in the future.
Common Business Turnaround Strategies
It won't surprise you to learn that the first actions are usually focused on reducing costs (to stem the losses) and reducing assets (to generate cash).
These actions buy time for the turnaround process but it is rare for cost cutting to be enough.
The management processes within the company need to be improved to manage by fact rather than gut feel or hope. Financial control systems need to be introduced which stop unauthorised expenditure, strength credit control and improve accounts receivable and keep the business up-to-date with current and expected future performance.
Next comes a realignemnt of the business to its market opportunities as its competitive position is strengthened. This may mean withdrawing from some markets where the business cannot win but expansion into other areas where its strengths fit the opportunities.
These actions buy time for the turnaround process but it is rare for cost cutting to be enough.
The management processes within the company need to be improved to manage by fact rather than gut feel or hope. Financial control systems need to be introduced which stop unauthorised expenditure, strength credit control and improve accounts receivable and keep the business up-to-date with current and expected future performance.
Next comes a realignemnt of the business to its market opportunities as its competitive position is strengthened. This may mean withdrawing from some markets where the business cannot win but expansion into other areas where its strengths fit the opportunities.
Business Turnaround Professionals
As Mark Blayney says in his excellent book "Turning Your Business Around", if your house is on fire, you call the fire brigade.
If your business in trouble, you need to consult the experts, both to check that you are not already beyond the point of no return and for practical help in the turnaround process.
If your business in trouble, you need to consult the experts, both to check that you are not already beyond the point of no return and for practical help in the turnaround process.
- Society Of Turnaround Professionals
- UK turnaround experts.
- Turnaround Management Association
- Turnaround professionals in North America, Australia, the Czech Republic, Finland, France, Germany, India, Japan, the Netherlands, Southern Africa, Spain, Taiwan, and the U.K.
Business Turnaround Self Help
If your business is in serious financial distress you need to take professional advice quickly.
However your business may be going through a difficult time but because of past successes, the underlying position of the business is still solid.
These resources may help you to take the actions you need. I will be adding to the list of book reviews in the next few months.
However your business may be going through a difficult time but because of past successes, the underlying position of the business is still solid.
These resources may help you to take the actions you need. I will be adding to the list of book reviews in the next few months.
- 7 Day Business Turnaround Kit
- Try this business turnaround program from Mark Joyner.
- Turning Your Business Around Mark Blayney
- Very good book for small business turnarounds.
- Small Business Coaching
- This is the link to my business coaching blog. I'm not selling you coaching services but it is packed with tips, ideas and advice on business management.
Business Turnaround Books From Amazon
Here are a few books for you to consider.
The Six Month Fix: Adventures in Rescuing Failing Companies
Amazon Price: $26.40 (as of 07/25/2008)
Corporate Turnaround: How Managers Turn Losers into Winners
Amazon Price: $34.95 (as of 07/25/2008)
Harvard Business Review on Turnarounds
Amazon Price: $13.57 (as of 07/25/2008)
Leading Corporate Turnaround: How Leaders Fix Troubled Companies
Amazon Price: $56.00 (as of 07/25/2008)
Turning a Business Around: How to Spot the Warning Signs and Ensure a Business Stays Healthy
Amazon Price: $24.75 (as of 07/25/2008)
Business Turnaround Tips
Have you turned around a business or been involved in a business that didn't take action when it should?
All turnaround ideas and tips are welcome.
The Latest From My Business Coaching Blog
Here are the latest postings on my business coaching blog.
Fetching RSS feed... please stand byBusiness Turnaround Articles On My Business Coaching Blog
- Business problems business health check
- Use the offer of a free business health check from business consultants and coaches to help identify problems and issues in your business.
- Business coaching in a recession
- This article looks at the decision to seek outside help when your business is going through tough times.
- Business failure and the role of management
- Ask an insolvency specialist and you are likely to hear that bad management is the number 1 cause of business failure.
- Beer game
- This article looks at the beer game simulation from Peter Senge's book The Fifth Discipline and explains how systems issues cause small changes to have major effects on the supply chain.
Business management coaching for customer focused entrepreneurs.Your Profit Coach is a trading name of Planning & Control Solutions Ltd, a company registered in England No 3897173
Registered office, 2nd Floor, 3 Brindleyplace, Birmingham, B1 2JB, United Kingdom
Paul Simister can be contacted by:
telephone on 44 (0) 121 554 4057 or
email paul@plancs.co.uk
