Business Consultants – 7 Steps to Turning Your Business Around

The first step in any business turnaround is to review and assess the present situation. To follow effective business turnaround steps, it’s crucial to fully understand the starting position. Gathering both objective and subjective data helps you review the situation, identify the causes, and understand the immediate effects of the issues impacting the business.

1. Management accounts,

Evaluate and review the sales order book, financial arrangements, internal controls, customer service levels, quality, and leadership skills.   Then develop your business strategy and plans.   For the business turnaround to be successful, you need a robust strategy and plans that will achieve success.

2. Communicate

With key employees. For the business turnaround to gain momentum it is necessary to meet with managers and key personnel. You should explain the current business affairs and inform them about the consequences of not taking corrective action. Communicate with other employees. At the earliest opportunity, you must meet with all employees or their union representatives, especially if planning job losses.

A prolonged period of uncertainty, fuelled by rumor and counter rumor, will not be beneficial to the business and whilst bad news may not be easy to deliver, the communication of it in a timely sensitive manner is desirable.   Meet the bank. You should advise the bank and other financial stakeholders about the business turnaround plans. If possible, arrange meetings to discuss the plans and seek their assurances for continued, or even increased, support for the business.

3. Meet customers.

Depending upon the severity of the situation, it may be necessary to reassure key customers of the business turnaround plans and the benefits that will accrue for them.  This action should be considered mandatory if the cause of the business’s demise has been poor customer service, poor product quality or any other matter not meeting the expected/agreed customer service levels.

4. Meet suppliers.

Open communication with suppliers is essential during a business turnaround to negotiate terms that support recovery and long-term growth.

If the business has failed to settle payable accounts on time, even the murmur of business turnaround activity taking place may result in suppliers imposing stiff payment terms that may jeopardise the business turnaround recovery plan.

5. Cash conservation.

Review and improve if necessary the credit management procedures.  If possible negotiate extended payment terms with suppliers; examine thoroughly all unused assets of the business and liquidate if necessary. In addition, eliminates all unnecessary overhead costs.

 6. Implement new/updated systems and procedures.

A thorough review of existing systems and procedures will be required to meet the goals of the business turnaround plan.  Implement change if necessary; a continuation of old practices will almost certainly result in the same old results.

7. Monitor,

Measure and take action.  Throughout the business turnaround process, results should be regularly measured against the plan, and corrective action taken if required.  Key Performance Indicators (KPIs) should be determined that will give a snapshot of the business performance and be available on a daily, weekly, or monthly basis.