What is a business turnaround?
In the corporate world, a turnaround specialist is brought in to restore the fortunes of a stumbling company. Typically, this solution means replacing entire layers of management, cutting cost and jobs, and much needed attention given to new and existing product lines. We read about them in the business section of the newspaper all the time. Think of the GM and Chrysler restructuring process.
In the world of small to medium size business, the focus is different - typically on finance and sales.
In large companies the financial side of the business is typically well managed, financial statements are in order and current; the relationship with creditors and banks managed.
In the small to medium size business world, this is almost never the case. The situation might be that the creditors are calling everyday demanding payments, bailiffs arriving to seize machinery, bank Lines of Credit being withdrawn, and suppliers cutting off credit. The business of the company is effectively on hold until there is some resolution.
The company bus is half way over the fiscal cliff.
Sales in small to medium size business companies are typically a problem. Sales have crashed and the company has lost it way. Since small to medium size business businesses depend upon an owner to be the salesperson in chief, sales suffer if the owner is distracted.
All creditor calls, bank demands, court appearances and demand letters distract the owner from making sales. Falling sales translates to less cash to smooth the waters with creditors. And the cycle begins again.
But one factor in a small to medium size business turnaround is quite different than a corporate world turnaround. In the corporate world, the Board of Directors instructs CEO’s and General Managers to make changes.
In the small to medium size business world, the owner is alone, struggling every day with a crush of problems, not related to building the business nor satisfying customers. Sales suffer.
Professional help is needed. Why?
A turnaround specialist enters a company with a fresh eye, knowledge and skills and enjoys complete objectivity. The professional is able to spot problems and create new solutions that may not be visible to company insiders simply because the latter are too close to the subject.
The turnaround manager has no political agenda or other obligations to colour the decision-making process, allowing him or her to take the unpopular yet necessary steps for survival.
Experience within a particular industry may mean little when a company is facing bankruptcy and a loss of revenue. A turnaround specialist brings experience in crisis situations. Like a paramedic, the talent lies in making critical decisions quickly in order for the patient to have the best chance at recovery.
Operating in the eye of the storm, the turnaround specialist must deal equitably with angry creditors, scared employees, and wary customers. With the highest stakes on the table, clearly this is no assignment for the faint-hearted.
When do you call in the medics?
Most businesses can be salvaged, provided that the business idea is still intact and there are still customers willing to buy. It is not possible to turn around a buggy whip manufacturer, for example.
But the timing is important. Each day lost in not hiring the expertise translates into just two things – more cost and more pain.
Having a Business Turnaround Strategy can help you Build Your business and create a more profitable company.
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