The Art of the Turnaround………………
This refers to turning a business around before it goes under. I refer it to as “hitting the glass ceiling”; a point where growth is stopped and the result is a decline in revenue. A very large business can carry on for a long period of time before they realize that they have a problem; in a small business the realization comes much faster.
A turnaround solution most often requires a change in direction. The reason for the needed turnaround is usually a fault of management. Management missed indications of future problems such as a changing market place or new products or new delivery methods or a multitude of other things.
A turnaround process does not entail the replacement of existing employees. The current employees are familiar with the company and with each other. If they are aware of the new direction and can be called on to share their knowledge and to be enthusiastic, then a good foundation is in place upon which to build.
Once again I refer to the need of a coach or experienced business consultant to help with this process.
The first step is to diagnose the problems that have gotten the business to its current situation. All company information should be available including financial records, marketing procedures, office procedures, etc. When the analysis is complete and a solution is brought forth, a look at time and budget is required to make sure that there is a sufficient amount of both to complete the turnaround.
One caveat I need to mention: ownership sometimes wants to continue doing the same things that landed the company in trouble in the first place. Change is the constant and in my experience a new direction or method of reaching goals is necessary.
A turnaround requires speed; the downward slope has to be stopped. The owner and staff have to “buy” into the new direction and should express confidence and also be realistic about the journey ahead. There is no room for fear or being sentimental about old procedures.
Turnarounds are hard to accomplish, but with proper planning and lots of hard work it is doable. The great thing is that once the slope goes from downward to upward, then a growth, which far surpasses the last, is possible.
The key to a successful turnaround is early recognition, admittance of its necessity, and swift action.
Nick J. Petra CFP
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