Business turnaround is about reversing a business’s decline, restoring it to stability and then re-growing its value. But business turnarounds are about healing the sick, not attempting to raise the dead.
So, to achieve a turnaround, you will generally need to have the following seven things present:
Turnarounds tend to divide into three key phases and while each phase needs to consider finance, people and marketing issues, there is definitely a shift in priorities over time from finance to marketing.
The first phase is normally crisis management, focused on short-term survival and restructuring down to a viable core concentrating on solving the immediate financial crisis. During this period, you may need to reduce employee numbers but it is important to keep key staff committed and businesses often also slim down their portfolio of products and markets to only those that are clearly profitable.
The second phase is one of stabilization and preparation for the relaunch of the business. This involves putting both appropriate financing arrangements to support increased trading levels, and the right management team who can push the marketing and delivery of growth products.
The third phase is then regrowth based on achieving long-term sustainable competitive advantage. To do so involves managing the business’s working capital cycle to support the business as it grows and recruiting and retaining the right people to drive growth of turnover and profits.
Louis Partenza is a business turnaround consultant, business coach and partner of Activate Group Inc, based in Miami, Florida. His firm works with companies to deliver transformational management and business processes to their executive leadership. To learn more about business turnaround consulting through AGI, please visit activategroupinc.com, contact Lou at (305) 722-7215 or email him.