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Paramedic or doctor? Taking the right approach to your turnaround strategy

It takes courage and a degree of humility to recognize that your company needs to implement a turnaround strategy. The decision may have been months or even years in the offing; the swelling worry as you watch your expenses mounting and your coffers draining. Or, it could have happened seemingly overnight: one minute you were bringing in large deals and the next minute the debt collectors were knocking on your door. Either way, once the decision to implement the turnaround strategy has been made, you’re probably feeling a sense of relief and possibly an added sense of anticipation at the same time. After all, this is the “last ditch attempt”: a recognition that things need to change if they’re going to succeed, and a singular channeling of efforts and energy to make that new start.

Business consultant Gary Rushin points out the risks inherent to implementing a turnaround strategy once it has been decided upon. Problems could arise in one of three scenarios:

  • The strategy is flawed
  • The strategy is good, but poorly implemented
  • The strategy is poor, and poorly implemented.

The risks denote a two-fold responsibility: to make sure the strategy is appropriate for your company’s challenges, and to ensure that it is properly rolled out.

Avoid short-term fixes

According to Rushin, ensuring that these two factors are correctly addressed involves a surprising approach to turnaround strategy management. He suggests that traditional management methods are employed rather than a new set of norms.

“Turnaround involves applying traditional management techniques mainly by following best practices in rather unusual environments,” says Rushin. “The business is distressed, both cash and time are in short supply and rapid restructuring is required. For the company owner or management, improving the short-term performance of the business is desired.”

But, says Rushin, to focus on this “would be a mistake.”

“The stage where the company is in the business life cycle and the attributes of the business will dictate the turnaround approach. The approach for start-ups and high-growth companies is different than the approach required for a mature low-growth business.”

You’re a doctor, not a paramedic

You could see it this way: instead of rushing onto the scene with a stretcher and a life support machine as you would for someone struggling for their life, treat this as a regular visit to the doctor’s rooms. Your diagnosis and treatment should be calm, holistic and long-term.

Don’t run in like a paramedic waving their mouth-to-mouth valve, rather walk in like a physiotherapist being visited in their own consulting rooms. Both your strategy and implementation should not be disruptive or short-term in nature. Your solutions may bring some instant relief, but most importantly they will provide healing and restoration in the long-term. Just as with a physiotherapist, the type and length of treatment should be dictated by the type of the business and its stage in the business cycle, as Rushin points out.

Take the time to diagnose

So what does this example actually serve to illustrate? In order to avoid the risk of developing a poor strategy or implementing the strategy badly, your diagnosis becomes extremely important. The ‘time spent in the doctor’s rooms’ needs to produce findings that are insightful and accurate.

To make an accurate diagnosis and recommendation for treatment, a physio needs to know the following:

  • What caused the injury?
  • How long has it been painful for?
  • What kind of pain is being experienced?
  • What exacerbates the pain?

Similarly, before identifying a suitable turnaround strategy, you will need to understand: what caused the decline? How long has the company been in decline for? Where is the company suffering most? Were there any particular triggers to exacerbate the negative condition of the company? Understanding these things will help you avoid a misdiagnosis, and help you ensure the turnaround strategy you develop is appropriate.

Just as there is only limited usefulness in consulting “Dr Google” when you have an ailment, so when your company needs a turnaround strategy, there is only limited usefulness in trying to determine what you need yourself. When you’re sick, you need a doctor; when your company is in decline, you need a qualified expert to assess your needs. If you are looking for such a person, contact The Finance Team. One of our experts can help accurately diagnose your company’s situation and help develop and implement a turnaround strategy that will see you experience the remarkable.

 

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 Image credit: © Hugo Felix | Dreamstime.com
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September 7, 2015 / No Comments /  

How to successfully plan your business turnaround strategy

It will be wrong for me to assume that all businesses are the same and allow me to share with you a practical way to implement a business turnaround strategy. The concept of business turnarounds are not new and the latest provision of the Companies Act give confidence to companies to adopt an approach that supports business rescue and turnaround efforts. In this blog, I want you to take a non-conventional approach to planning your turnaround strategy.

Step 1: Make a list

A good place to make a list of what are the things that keep you awake at night about your business. Issues could include:

–          Lack/loss of sales

–          Lack/loss of margin

–          Lack/loss of profits

–          Lack/loss of cash

–          Inability to collect outstanding sales

–          Increased competition

–          Increase in the cost structure of your business

–          Inadequate return on assets

–          Low return on earnings

Next, I want you to make an honest tick next each of the issues that you listed as to whether you properly managed and measured these issues from a performance management perspective. So what are you going to find? – simply that the things that you should have been managing and measuring you have not measured and managed. I want you to do this so that you are able to realise that without a yardstick, without a measure of performance, without a goalpost, it’s incredibly challenging to convince yourself to go forward.

The simple reason why I want you to write down all the challenges that you face in the business is that on a personal level, it becomes therapeutic and you have now emotionally release the issues and have them on paper.

Next up, I want you to write down on a new set of paper all the lessons you learnt when you noted all the challenge areas and reflected on the things you should have done.

Now I want you to go to a safe place and burn the paper that contained all the challenges and while the paper is burning say the following out aloud:

The problems are not the problems. The problem is my attitude towards the problems.

Step 2: The Magic Wand Process

Next, I want you imagine that you were given all the most cost-efficient resources in the world and you could, at your choosing, now create the most cost efficient way to serve your customers using a brand new business. Construct this new value proposition –

–          Who is my ideal customer?

–          What do they really want and are genuinely willing to pay for?

–          How do they want to be reached?

–          How do they want to pay?

–          What is the best business model that I can bring to bear into the market?

–          What ‘secret sauce’ can I add to the mix that will truly wow your customer?

–          What ‘quick-wins’ can I put on the table to accelerate my success and enhance my motivation?

–          What technologies can I deploy that will give me an edge?

–          Where am I and what am I doing?

–          How am I managing this business?

–          What is the ideal way of managing this business?

–          Why am I in this business?

–          For whom are we genuinely creating value for in this business?

–          How will I know that I’m done in this business? What must I have accomplished?

–          Add in: the lessons learnt sheet and reflect on this in terms of the above

Step 3

–          Step 1 is your non-ideal: “AS-IS” scenario

–          Step 2 is your ideal: “TO-BE” scenario

What are you waiting for?! Go make it happen!

Photo credit: transcapital.co.uk

 

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July 17, 2014 / No Comments /  

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