When it comes to management strategies for a successful turnaround, a quote by financial-world wizard Warren Buffett is apropos.
“Risk comes from not knowing what you’re doing,” Mr. Buffett said.
My response: “Touché.”
It’s all about capital mobility created by effective management.
It stands to reason that turnaround success starts at the top – management must know what it’s doing and see the big picture.
To help you see the big picture confronting you, here are 11 turnaround principles:
1. Before acting, get the right information
Don’t get paralysis from too-much analysis, but know the difference when to act quickly or to be still. That’s where having experienced advisors will be productive for you.
2. For a 180-degree turnaround, use a 360-degree HR approach
Many solutions lie within your company. Employees should be assets. Conduct an organizational assessment.
Some employees can provide valuable insights about company culture, accountability, middle management, processes, internal communication, and customer preferences.
3. Consider yourself a CEO of your profession, not just your company
Complete balance is necessary. Whether you’re in the automobile business or technology, consider the perspectives of all your stakeholders not just your company.
“Risk comes from not knowing what you’re doing.”
4. Be careful to whom you listen
Lawyers don’t always know best. After the Gulf oil spill, my sense is that BP suffered in crisis management because the CEO listened more to lawyers than business and reputation experts.
5. Become a master in tough-love management
Don’t allow yourself to become uncomfortably straitjacketed. You have to make tough decisions on which to act. This is not a time for people-pleasing. Evaluate your each member of your staff. Get rid of unproductive employees.
6. Analyze the root causes of your situation
They usually include the poor-employee performance, marketplace competition, inaccurate sales forecasts, unproductive strategies, weak execution of strategies, expenses, inadequate cash flow, ineffective financial controls, and weak economy (which is why my writing also focuses on public policy).
7. Do your due diligence regarding your future
Assuming your firm is worth the turnaround effort, assess your prospects. How do your prospects align with your potential for improvement? A lot depends on two key elements of culture.
The abilities to innovate and to respond to the marketplace have a direct impact on your success. So if you’re dissatisfied with your revenue, it’s time to evaluate your culture. Why? Superior culture drives business performance.
Superior culture drives business performance.
8. Plan strategically with proven approaches
Consider time-proven tactics, which include dumping poor assets, increasing revenue, lowering costs, managing your inventory costs and making strategic purchases.
9. Assess your cash-flow issues
Develop and implement an emergency cash-flow plan.
Your image can also suffer with vendors or with customers, if you don’t manage your cash flow. There are at least seven ways to creatively manage your cash flow.
10. Restructure your company
By now you’re ready to implement solutions. They include improving company culture, making operational changes, adding or changing products, and fixing your branding approach.
11. Think big picture
Start working to become known as the go-to authority for your industry. That includes getting involved in public policy that adversely affects your industry and business.
If you’ve implemented the 11 strategies, you’ll be well on your way to increasing your business value.
If you can’t enjoy a return to profits, an exit strategy is your last alternative. Actually, you should always have an exit strategy in place, anyway.
An immediate abandonment strategy means you might have to sell to another company or liquidate your assets.
Otherwise, you might consider harvest strategies, which allow you to evaluate your success against benchmarks. Options include preparing an initial public offering or selling to your employees in an employee stock option plan (ESOP).
For an ESOP, you’ll need a positive company culture. Poor morale or divisions among employees will lead to their failure as a company.
From the Coach’s Corner, here are related resource links:
Step-by-Step Solutions for a Financial Turnaround — Difficult economic conditions have exacerbated the woes facing many businesses. But business success is possible for companies suffering through financial red ink. Here are financial solutions that will help facilitate a company turnaround.
Overcoming Obstacles for Business Turnaround — 13 Steps — For a successful turnaround of financially troubled businesses, there are usually two obstacles to overcome.
Cutting Costs — 9 Best Practices to Avoid Making Reactionary Decisions — In chaotic times, it’s common for businesspeople to be fearful and reactionary when they feel they must cut expenses. But entrepreneurs need to be unemotional so that they make decisions that will bolster their objectives. They can take the emotion out of their decision-making — by eliminating stress factors – if their priorities are clearly defined with values.
6 Steps to Implement a Cultural Change for Profits — If your company is lacking in teamwork, morale is poor and profits are weak, chances are you need to change your organization’s culture. Be forewarned, changing a culture is a monumental chore because it will take strategic planning and super powers of persuasion.
8 Simple Strategies to Give You Pricing Power — If you’re struggling with pricing strategies, you’re not alone. Many big companies struggle, too.
“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”
–Peter F. Drucker