How to Turnaround a Failing Business
In these economically challenging times there are more and more businesses that find themselves in that difficult situation where sales are falling, costs are rising and the creditors getting ever more agitated. Before a business owner or investor throws in the towel and winds up the business it is worthwhile considering a turnaround approach.
Generally, turning a failing business around takes a specialist approach and there are many factors involved but a few key pointers are as follows:
- An honest analysis
The turnaround manager must take a thorough look at all aspects of the business and come up with a simple, honest and realistic appraisal of the enterprise and its chances of survival and future success. This initial review should look at all aspects of the operation including: sales; finance; administration; staffing levels and overhead costs.
- In what form can the business survive?
Often a company has been over trading and has too few sales to support the level of overheads it has accumulated. An experienced turnaround manager will be able to tell you what the business can afford, and will point to areas where cuts can be made and efficiencies introduced to create a more sustainable company.
- Speed is of the essence
A failing company is losing money and the longer it goes on the more it will owe to creditors and maybe the bank — By acting quickly you will stem the losses and allow yourself some breathing space to try and pay off debts and build up reserves.
- A credible financial plan for turnaround
If creditors, the bank and staff are going to support a business they must see a clear and achievable plan for future success. This can be very short and simple and must show how and when debts will be paid but it needs the buy in of the key creditors.
- A clear strategy for the future
A fundamental analysis of the causes of the problems will reveal where the company has gone wrong in the past and a new strategy should avoid previous mistakes and follow a new direction that is clear and robust in a competitive world.
- Be positive
Despite tough times it is crucial that everyone involved in a business during turnaround is positive and believes in the future. Everyone who works in the company must buy-in to the future plan and success. Often staff and even senior management are wedded to “the way we used to do things around here” and they become negative and sometimes obstructive. It is imperative that everyone on the team is working to the same goal – if not they should leave or be asked to go for the future good of those that remain and want to make a success of the new opportunity.
If you need further advice or support then do speak with a professional business turnaround advisor, they can make all the difference as to whether your business survives or thrives.