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Home  Business Turnaround How To Ensure Your Business Turnaround Will Not Fail?
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How To Ensure Your Business Turnaround Will Not Fail? |
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Written by David Willetts
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How will you make sure your business turnaround will succeed? Learn why some business turnarounds fail.
The business owner may recognize that the business may be:
1. More complex – perhaps overtrading
2. Demanding, problematic and stressful
3. Less successful than previously
4. Facing increased competition
5. Encountering pressure from investors
6. Suffering low
staff morale, high
staff turnover
7. Not generating positive cash flows
These are typical symptoms that give rise to business failure, but what reasons give rise to such situations?
There are many and may include:
1. Poor or lax management of the business
2. Denial of the issues jeopardizing the future of the business
3. Lack of management and/or financial skills within the business
4. No goals for the business – no focus
5. A reluctance to change
6. An inability to distinguish between ‘cause and effect’ when resolving problems
7. A failure to take tough, good business sense decisions
A catastrophic event or third party pressure may be witnessed that will polarize the business owner into appreciating changes in the business operation will be inevitable - a business turnaround.
In the circumstances outlined what actions are necessary to avoid a business turnaround failure?
Without doubt a paradigm shift in the management style of the business will be required. A continuation in the same approach in managing the business will almost certainly give the same results or worse. As a consequence the business owner should upon recognizing the symptoms of failure take immediate and decisive corrective action. Failure to do so at this stage may ultimately result in insolvency.
A major problem faced by the business owner in such circumstances is understanding what action(s) to take and how best to implement changes. Often the business owner will be an expert in designing, manufacturing and selling products or services, but will not be sufficiently trained in effectively managing a business turnaround situation. If the owner is:
1. Fearful of the situation
2. Unclear regarding business goals
3. Lacking confidence in ability to deliver results
4. ‘Racing against time’ to save the business
5. Missing the necessary specialist skills
6. Unable to communicate satisfactorily with the business stakeholders
7. Struggling to manage cash flows
then business turnaround help should be sought without delay.
"It's hard to lead a cavalry charge if you think you look funny on a horse. "
Adlai Stevenson
Avoid a failure in your business - turn the business around. The earlier corrective action is taken the remedy will be:
1. less painful
2. less costly
3. provide more control of the future business for the owner
A business turnaround failure will result should:
1. The business not plan robust solutions to turnaround the business
2. Not communicate and gain agreement of the plans with all affected parties
3. The management team not be committed to creating a successful business for the long term
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