A Step by Step Business TurnAround Process for Success
Posted on July 2, 2010
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The most important parts of a Turnaround Strategic Development and Deployment are leadership, experience and expertise. The success of a Turnaround Plan rests with the people on the Turnaround Team and their power and willingness to incorporate all Company’s management and employees in the process. It is important to have Process structure which can achieve this. As a Business Consultant, I understand process, but I also understand the importance of experience and fresh ideas in a turnaround situation. It is the expertise of an experienced Business TurnAround Consultant who can adapt process to a particular situation in order to find unparalleled, creative, successful solutions to a tough situation, using the strengths and experience of the Turnaround Team and the insights of Company Managers and employees, lastly putting it all jointly in an agreed upon, synergistic, effective Turnaround Strategy, Plan and project.
Going into a Turnaround situation as a Business Consultant, I find that the processes I use to find solutions and options are very similar to the one’s I use when I consult with a non-turnaround Company, except for a few decisive differences, like the time factor or creditor pressures; however, I find similar factors and pressures in non-turnaround companies as well. I go back to the point I made in the first paragraph, you cannot hire a Business Consultant soon enough in any stage of business development or situation your Company may presently occupy. A Business Consultant should be part of your Company’s success team, just like experienced Management is a key piece of a Company’s success.
The one big thing I have learned through my Business Turnaround Services is the most important thing a business consultant should do upon entrance a turnaround situation is to listen, get to know everyone throughout the organization and give them opportunities and avenues to communicate to you, along with the Company CEO. The business owner or CEO should be right alongside the business consultant and carrying out a similar strategy. This will instill trust and openness throughout the organization. Integrity is huge in a turnaround process and the CEO and business consultant must show this in force together so the entire company is enthused to join with them. If a particular CEO does not have or cannot fix a trust relationship with the employees, then it is time for the CEO to step aside and let someone come in that can gain and hold that credibility and trust with the employees, otherwise, the turnaround strategy will never be very successful. The replacement CEO can be a turnaround specialist CEO or you can promote someone who holds a strong bond and esteem with the employees from within the business. Now that trust and integrity in the turnaround process is established, it is time to get the whole company working on a turnaround plan.
Step by Step TurnAround Process
Step One: Learn about the Business
- Tour the facilities and meet the people. expend plenty of time talking to the employees explaining the role of the Business Consultant and Turnaround Team. Encourage Feedback.
- Business Consultant meets with the Board of Directors, Executives, Founders, Owners, Department Heads, Managers and Key People.
- Assemble the Turnaround Team.
- Get a firm idea of the Company’s history, passions, successes, failures, competitive advantages, processes, organizational structure, trademarks, patents, intellectual property and so forth to fully understand the life blood of the business.
Step Two: Meet with Advisors, Creditors, Customers and Suppliers
- These critical turnaround players need to have a firm understanding of the turnaround team’s goals and objectives.
- Establish credibility.
Step Three: Evaluate the Problems and Issues
- This can only be done effectively if Step One, spending time with the managers and employees, has been completed.
- Determine timing factors from the outset.
- Identify, quantify and prioritize obstacles to overcome.
- Have a clear understanding of what the Market can and cannot sustain. Give the Plan a believability factor.
Step Four: Identify the most Pressing and Significant Problems
- Segregate the problems which have the most influence on the turnaround situation and concentrate on those. You can concentrate on the other problems later if your turnabout is successful.
- Be sure to identify problems as seen by ownership, executives, managers, advisors, creditors, customers, suppliers and most importantly, the employees.
- Prioritize, again, the pressing turnaround issues and problems. Concentrate on this list and the related areas. Do not get side tracked.
- Identify the revenue points and expense ratios for the products and services which are involved in these key problem areas.
Step Five: Seek Out the Opportunities
- Yes, I said it, opportunities. Turnaround Strategy is not all about problems, issues and cutting them out of the organization. That will answer in a band aide which won’t be able to hold for very long.
- Opportunities are what will gain traction with creditors, suppliers, customers and employees alike to bring about positive actions to put the Company on a healthy track or at littlest have a fighting chance thereof.
- Opportunities can be hidden but can effectively be flushed out with a good process and they don’t have to be time consuming to exploit or have to be too resources intensive. Because, in the end, restructuring and cost cutting alone will not bring about lasting success for a turnaround Company and its creditors, suppliers & customers know that.
- Get a firm understanding of the resulting margins these opportunities could present, and whether existing products/ services can be used or need modification. Note, modification is the key word here. You will not have the time, resources or support of the major players to develop new products or services.
Step Six: Analysis
- At this point, you must conduct market research and customer inquiries to determine if the market will support the assumptions you have made in the Opportunities Identification step.
- Make sure any supported opportunities have a good fit with the current business’s structure. Can it be done?
- Pick out the opportunity or two or three which can be implemented quickly, efficiently and economically.
- Go back to your prioritized Problems list and identify strategies to employ which will cut expenses, restructure and bring the problem/ issue back in balance.
- Compare the key opportunities & Problems to determine if they are counterproductive and whether you can simultaneously implement them.
- Identify and link certain issues and problems. Clear winners are those which readily relate. Keep the others “on ice” until and unless necessary. Exponential results of linking Problems with opportunities will be far more effective than divergent Opportunity and Problem strategies.
- Best Advice: Remember that Turnaround Strategy is not all about cost cutting, problem identification and re-structuring. Successful Turnabout Strategies are those which have lasting effects and are not just reactive. Proactive Strategies will ensure the Company has a future, has a fighting chance and has opportunities in the market to quickly exploit. Identifying and fixing problems are easy and temporal (i.e. the band aide effect); opportunities and successful exploitation of them brings lasting change; a change which may or may not be completely successful but which gives the Company and its employees a fighting chance.
Step Seven: Resource Audit
- Do you have the right mix of skills, experience, management and people to suit the turnaround strategy? If not, can you acquire them? Cost?
- Financial Audit: Do you have the necessary financial structure and resources for plan deployment? Is additional finance necessary, available and timely?
- Develop Cost Minimization Strategies for the deployable resources.
- Develop Contingency Resources.
Step Eight: Risk Assessment
- Are the risks involved in the Turnaround Strategy manageable?
- Identifying critical milestones which will minimize the plan’s overall risk.
- Reprioritize the Strategy by plugging in risk factors and milestone accomplishment factors.
Step Nine: Develop the Business Strategies and the Turnaround Solutions
- The Turnaround Team puts together the final Turnaround Plan, which provides step by step solutions and exploits opportunities.
- The resulting Business Plan clearly shows how expenses can be minimized and certain profit areas will be maximized.
- A Business Strategy is developed which lays out important schedules, milestones and resource deployment to with success implement the Turnaround Plan. This Strategic Plan clearly shows customers, employees, creditors and suppliers how these changes will directly and positively affect them. The Plan is backed up by an experienced Turnaround Team, solid Analysis and Excellent Forward- Looking Market Analysis & Planning. Lastly, the Strategic Plan will show how the Company will re-establish its Competitive Edge in the Market place. Sell it!
Step Ten: Acquire and Leverage Needed Resources
- Establish control systems and mechanisms.
- Clearly understand the motivations of Resource Providers.
- Understand that Financial Resources are mostly a question of structure, as good structure can minimize resulting costs and be strategically leveraged. An expert Financial Consultant is absolutely necessary.
- Look to fill human resource needs inside the company before going outside. Too many outsiders can breed distrust and unmotivated current employees. Build in incentives and profit sharing to cut human resource salary and benefit costs.
Step Eleven: Deploy and Don’t Look Back
- Confidence, leadership and direction are key at this point.
- Hindsight is 20/20 and looking back won’t help. You have a good plan; people are sold on the plan; look and implement the plan.
- Deploy Management Systems, Control Systems and Performance systems.
- Re-work/ adjust the Turnaround Strategy and Plan as necessary as you go on and learn better, more effective strategies.
- The Turnaround Team should meet on a consistent basis and ensure the Turnaround Plan is being implemented as agreed and schedules are kept. The Team keeps close communications with employees, customers, suppliers and creditors, updating them on progress and changes.
- Management is fully assignd and trusted to implement the Plan.
Step Twelve: Obtaining and Distributing Value
- Along the way, when Plan milestones and successes are met, harvesting options should be well thought out(p) and deployed to meet company obligations.
- Should have a clear understanding and agreement among all parties involved and contained in the Turnaround Strategy exactly what factors will trigger or prevent a harvest, and how that harvest is to occur and value distributed.
- This is the stage to remember who got your Company to this point (don’t forget about them):
- Your Employees
– Your Managers
- Your Resource Providers
– The Cooperation of your Customers, Suppliers and Creditors
The End Game Goal
If you follow a process similar to what I laid out here in this article, as well as, have strong leadership skills, then you will find success more often than not. However, unfortunately, the turnaround plan isn’t always successful or the situation is just to far along and too dire to really fix for sustained rebound. In that case, a major restructuring, a bankruptcy, a quick fire sale, or a liquidation of some sort, changing the end game from a business turnaround to a business dismantling strategy. While this can be a tough thing for the turnaround team to own, if you ran a good turnaround process and it failed, employees and customers know you were vested in it and did all you could. They will adapt and move on to other challenges. Trying to hold on to what could have been is certainly toxic to any future venture- let it go. You did your best. Right? For many a turnaround defeat is chalked up as failure, but for me, I chalk it up as a business learning experience since the business owners, managers and employees will never in the future let a similar situation happen again, or will see the warning signs early enough to address and sustain the company. This type of learning experience can be extremely effective in leveraging future successes. However, do know that if a good business turnaround process is well developed and then implemented, with a solid turnaround team in place, the end result will mostly end in keeping the company, a company changed for the better and ready for the future. Growth post-turnaround can be exponential, so it is important the turnaround process looks to the future with a good business plan in place.
My Parting Advice
Three things I want to leave with you, which are critical to the success of a Turnaround Strategy and Plan:
- Business Consultant’s Importance: An experienced Business Consultant should head up and coordinate the numerous roles, duties and responsibilities of the Turnaround Team; not the business owner, CEO, lead investor, turnaround specialist, interim CEO, Board of Directors or Key Advisors. It is the experience, objectivity and expertise which a good Business Consultant can employ to effectively manage a diverse team of Turnaround Experts and Players. Give the Business Consultant the authority and negotiating room to achieve this and ensure the entire team is on board with this structure. The Business Consultant is the one player who can be objectively accepted by all the parties involved in the Turnaround Plan- utilize that synergizing power and advantage.
- The Turnaround Team Runs the Show: It is the team’s role, duty and authority to ensure the Plan is well implemented, re-worked when necessary and performance controls are in place along the way. However, remember the Team’s accountability to the employees, owners, investors, suppliers, customers and creditors is preponderant. Clear lines of authority and responsibility are critically important for the Turnaround Plan’s success, but the team must delegate and trust management with the day to day implementation and management of the Plan.
- Gut Instincts: Gut instincts are so very important in a turnaround situation. Process works and is fine and dandy, but turnaround talent also depends on excellent business instincts. This is where experience plays a major role. Recruiting experience up front into the Turnaround Team will increase the “gut” factor and be the most successful element of a Turnaround Process, Strategy & Plan.
Note: This is a general outline of a Turnaround Process to employ but must be adapted and expanded for the situation at hand. This is a good starting point but by no means the final, resulting Turnaround Process.
About the Author – Frank Goley
Frank Goley is a business consultant, business turnaround consultant and business plan consultant for ABC Business Consulting. He has been helping companies to succeed for many years. Frank wrote his first business plan over twenty years ago. He is an expert in developing business plans, marketing plans, funding plans, strategic plans, turnaround plans, web marketing strategies, and project specific business plans. Frank is also a business coach and a web development, web marketing and web seo consultant. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 50 published articles and e-books on business success strategies. He also writes the Business Success Strategies Blog.
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