CEO Advisor Newsletter August 2017
7 Turnaround Strategies to Revive a Distressed Business
Some businesses recover and bounce back stronger than before and others simply do not. It is very important to seek help, such as a seasoned business advisor with extensive experience, who can help you plan, make the extremely tough decisions and execute your plan to turn your company around.
There are many factors responsible for this near death experience, including those that are self-inflicted like a major project failure, lack of timely reporting/information to manage the business, incompetent management, poor sales management and poor financial controls.
Reviving a Failing Business
If you are struggling with a failing business, here are 7 turnaround strategies to help you resurrect your business and prosper.
1. Realize the SituationYou must first identify the real problem(s) and commit to resolving issues that need addressing with a high sense of urgency. You need to get committed to documenting and making the needed changes and seeking the help you need from a seasoned advisor that will help you with the many extremely tough decisions that you will face. If you feel your current management team will fix things, why did they let the business get into this situation in the first place?
a. Strategy - Look closely at your business strategy to ensure your business is relevant, focused and managed tightly. Does the business have "Need to Have" or "Nice to Have" products/services, and is the majority of the revenue recurring or not?
b. People - Are the right people running the company? Are the right people in the right positions and are they capable of making tough decisions proactively? Are employees committed to profits and success? Are employees properly incentivized to generate profits and share in the ongoing success of the company?
c. Customers - Are customers satisfied? Do they know, like and trust your brand? Is the business focused on profitable customers versus unprofitable and difficult customers? Are you identifying, targeting and selling the right customers?
d. Product - Are you offering high quality, innovative products and services? Can the business better utilize technology to create better products, reduce costs and improve competitive advantages?
e. Process - Is the company performance-driven and goal-oriented? Are there processes and procedures in writing to enable the business to improve? Are goals well defined and employees held accountable to goals?
f. Finance - Are cash flows sufficient to sustain ongoing commitments and operations, as well as, generate a return? Does this business have excessive debt and why does it have excessive debt? Are gross margins and pricing proper to optimize profits? Do you know your break-even point? Is your sales team efficient with strong sales management?
Realizing your situation is a critical turnaround strategy; without it all other things are just frantic moves that will yield minimal results. Before you begin to act, know why, what and how distressed your business is, and get the help you need to "right the ship."
2. Redefine Your StrategyAfter realization comes re-definition. Realization determines what's wrong with your business and re-definition is putting the business back on track. This is when you get busy planning, and making and documenting tough decisions to change the overall direction of the company.
This is where you create the Turnaround Plan. Be brutally honest with yourself and your advisors every step of the way. Failing in business is often a result of not having a clear direction, or being highly diluted and inefficient. So, pinpoint the issues openly and honestly, be proactive, and set deadlines for the required changes with a single employee assigned to ensure the needed change is implemented.
3. Re-Engage PeopleYou can't turnaround a distressed business without re-engaging your employees. People make or break your business, and accountability is vital to your success. To resurrect a failing business, get the right people on board and get the wrong people off, period! This requires proactive, tough decisions to structure the personnel and management to execute your go-forward plan.
4. InnovateLack of innovation is one of the warning signs of a distressed or dying business. It is impossible for a business to remain relevant in the market if it fails to introduce new products and services or update existing ones. People change, markets change, technology changes and so must your business. If you refuse to change and do not innovate with new and improved products and services, you are doomed. To bring your distressed business back to life, focus on innovation and devise a written plan to generate a high ROI by retaining and growing your existing customers and selling new quality customers, while focusing on quality products and services.
5. Branding and MarketingOne of the consequences of a distressed or dying business is the negative impact it has on the brand. Your customers begin to lose trust in the brand as their satisfaction level declines. Negative information spreads and the brand is no longer liked or trusted in the market. To correct this negative association with the brand, you have to make fast and definitive changes, update and refine your marketing plan and budget, track your results and re-engage your best customers.
6. Finance and Cash FlowA detailed focus on your financial reporting is critical. Money is a must to any business and lack of cash is one of the most obvious signs of a distressed or dying business. Not only is a lack of cash a telltale sign, but also a lack of accurate and timely financial reporting along with the expertise to interpret and effectively use this information.
Insolvency is a situation you must avoid. If you can't meet your financial obligations and are already insolvent, you must create a plan to turn things around immediately. External funding can be a very daunting task, especially if you are insolvent. Focus on funds from within the business by cutting costs and expenses, accelerating collections and focusing on selling to your best customers to generate cash.
7. Execution and Tough DecisionsAfter all is said and done, there is no way to bring your distressed business back to a strong and thriving business by mere words; you need to make the commitment and get busy. You need to both rethink and rework the way you are used to operating and accept help, as well as, change!
Many CEOs and business owners are engaged in a random approach rather than a documented, performance-driven or goal-oriented approach to their business, and execution is the key to your opportunity for success.
These critical processes must have an accountable CEO or owner and must have written goals and key indicators to track performance. This takes discipline, carefully documenting your plan, experience, expertise and execution to turnaround your distressed business.
CEO Advisor, Inc. has the expertise and experience to help you make the tough decisions and execute your plan to turn your company around. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Key Factors to Grow Your Business to the Next Level
2. ForecastingForecasting for the current and upcoming years enables (forces) you to think through your business thoroughly, set goals, plan effectively and better budget and manage with higher profits. When forecasting, refine your business model, your pricing and gross margin targets and plans for hiring. Relook at operating expenses for the right level of profitability. Get objective expert advice in this area to ensure your growth and success.
3. Strong Management Team Make sure you have a reliable and competent management team around you to complement your own skills and expertise. If not, replace the weak link(s) in your all-important management team. If you cannot afford the management team you need today, bring in a seasoned business advisor that can do some heavy lifting for you - hands-on work and expertise for an interim period of time to achieve your goals.
4. Put Processes and Procedures in Place Document your processes and procedures to ensure your on-going success. This will enable you to run your business more profitably, is easier for new employees to get trained faster, will make the business more efficient, and will make your business more valuable and attractive to investors and acquirers. A business consultant can accomplish this very efficiently.
5. Innovate Innovation is important for all businesses. Focus on how you could do something differently to generate a higher ROI for both you and your customers, make your customers more loyal and profitable, reduce time, be better than your competitors, and develop a more effective business model.
6. Sales Strategy Your sales strategy is critical to your growth and profitability. Pinpointing your target markets, determining your most efficient and cost-effective sales structure, sales compensation, product mix, gross margins and sales goals are all critical to your success. This requires diligent and proactive sales management on a daily business.
7. Build Value Ensure you have the proper pricing and a recurring revenue business model that maximizes sales, margins, profits and value for a successful exit when you decide to sell your business, or the right buyer knocks on your door.
CEO Advisor, Inc. has the expertise, coupled with hands-on advice, to help you increase sales, profits, value and to grow your business to the next level. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc., for a free initial business consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us today at www.CEOAdvisor.com for more information.