4 steps to take your business out of crisis
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.
Even a god manager or good CEO can miss the early signs of distress. Miss or maybe ignore them.
The first step of taking the business out of crisis is to acknowledge that there is a problem.
Quite often the companies are like the metaphorical frog that doesn’t notice the water it’s in is warming up until it’s too late. I am not saying they are bad managers but for some reason they miss, they ignore, they underestimate or deny, or they are too optimistic about the signs of distress.
I did many times in my businesses as well and I know it’s so difficult to step back and review our plans, numbers or the situation really objectively.
So first step – acknowledge the problem.
The second step is to focus on cash and cash returns. We have to realise what investments, or what operations in the business are generating the cash, and what are burning the cash. The business at any stage of the distress must prepare a good and real cashflow forecast and watch it, analyse it every day or every week, depending what size the business is or its complexity. Obviously, cashflow management, cashflow forecast or improving working capital are larger subjects and I will be talking about them in more detail in the next posts.
The third step is creating a great change story. What do I mean by that? We have to think about the story that we are going to sell and going to communicate to our staff, to all the stakeholders really. It should be about why we need the changes, about motivating our staff by selling salvation, and about banishing inertia and changing the dynamic. Obviously, above all at the first stage, people have to know about the crisis because it will drive them to action, as well as open up their abilities to have new ideas and so on.
And finally, the fourth step. This step is probably the most difficult one but it’s really powerful. It’s for really tough managers. But I believe, you are either a tough manager or you run a weak business.
BTW, I strongly advise to read the book – “Tough Minded Management” by J.D. Batten, from 1963.
OK, what is the step about? It’s about replacing a top-team member of staff, managers, or two, three members, depending on what size the business is about or, what stage of distress the business is at. And this is not about bad managers. This is a practical reality that there are people who must own the decline. And really, that person or that people quite often are the most incapable of the shift in mind-set, because they believed for years in what they were doing. They quite often may even block the changes, subconsciously.
But apart from that, replacing these members sends a signal to our employees, and to all stakeholders that there will be changes and we are not afraid to do what needs to be done.
BTW, such a move is also a real opportunity to find new talents in or out of the organisation.
Right business owners. Thank you for today. We’re going back to work.
See you for now!