What the business turnaround process looks like?
Hello Business Owners!
Today, I will be diving into:
I’m going to talk about the stages during the turnaround process, and what or who is involved in that.
Let’s get started, then.
I usually split the turnaround process into 3 stages:
1st stage – A Business Model
2nd – Technical Analysis
And 3rd – People and Psychology
Right. First, I’ve mentioned a Business Model. What do I mean by that? We need to get very familiar with the business model to understand the business idea, business structure, ability to make a profit, and how the business works.
It’s a plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing.
A business model is a company’s plan for making a profit. It identifies the products or services the business is selling, the target market it has identified, and the expenses it has.
We will also look upon the value proposition, the mission statement – very important, and upon the OST (which means Objectives, Strategies and Tactics).
We are going to return to one’s roots (I mean to the start) and slightly refresh the current OST. At this stage, several people from within the organisation will be involved as I am not at the position to dictate that to the business. The business knows that better but needs some impulse, some impetus or motivator to rework its objectives, strategies and tactics.
OK, now we have a second stage – Technical Analysis. Technical Analysis will allow us to work out my financial KPIs for the organisation. This will show us where the problems might lie and where the potential cost cuts are available.
I will be looking for trends for the last 3 to 5 years in those KPIs. And that will give me the information and tools what must be done to fix the business successfully.
But, to do that, to fix the business successfully, we will need something else, something that I believe is the most challenging part. This is something why not everybody can turn the business around. And this is the people, and this is the psychology.
What do I mean by that? Once we agreed that the business model and the numbers might work, and we’ve found out where the problems are and worked out the potential solutions, we will need people from within the organisation to be committed a 110% to our plan. They don’t need to know what the plan is about, because they do not really bother about that. They also don’t care about the profit really. They just care about surviving. They must believe that the turnaround person (e.g. me) is like a magician and will certainly help the business survive the next decade or longer. This is the essential thing in any business turnaround – people. People must believe and must give 110% of their abilities. And I tell you, human beings, unlike machines, are able to do that.
OK, but you may ask how to achieve that whilst the business has been down for maybe a long time? After all, people are demotivated.
I implement different psychological techniques, sometimes quite radical, but that really helps the turnaround process, helps the business and above all, at the end of the day, helps the people in the organisation.
And this is it really. This is how I help businesses.
Obviously, sometimes it might have a different model or a different scenario.
I can also add a few points here:
1- Turnaround is not about growing sales.
2- Any business can be turned around, as long as there is revenue in the business.
3- I tend to complete the turnaround process within weeks, not months! This is a very intensive process after which you get a really profitable business as an outcome of it.
4- It looks pretty simple, I mean the turnaround process. Why then the company’s board or accountants cannot do that itself? They just can’t. You need a third party really, who is able to see what others aren’t, especially the others from inside the organisation.
Right business owners. Thank you for today. We’re going back to work.
See you for now!