Determining the best time to attempt a turnaround for your business involves carefully analyzing the current condition of the business and the potential market value. If you know you want your business to succeed, but you have lost the drive to continue pushing forward, it may be time to turn it around. You’ll have to carefully analyze the company’s problems, evaluate your resources and determine if the company in its current state has the means to push forward. Sometimes, the solution might be to cut your losses and liquidate the company. In other cases, you may simply need to sell your company before it becomes unmanageable. If the ownership is tired or doesn’t have a system in place to replace the owners, it may be time for a turnaround. This is especially true if you still have a product that is in demand.
Each Company is Different
When it comes down to it, each company has to be evaluated based on their own unique situation. While it’s tempting to want to try to create a list of signs that indicate it’s time to turn a company around, the process remains a complicated and elusive issue that can’t be summarized in a simple list of indicators. Before making the decision, you should carefully review the following questions:
- Leadership: Does the company have the right leadership to go in the desired direction?
- Funding: Is there proper funding, or is the business going to continue operating at a loss?
- Relevancy: How much of a demand is there for your product or service?
- Practicality: Is the company willing to make tough decisions about the future of the business?
Once you can answer these questions, you’ll be in a better state to determine how to proceed. One of the biggest issues companies face is when they don’t have a clear direction and understanding of what went wrong with the business in the first place.
Establish a Turnaround Process That Leads to Success
An effective turnaround process can help your company find out what went wrong, and identify any areas that need to be re-visited. This process is critical, and it may be necessary to hire a professional to help honestly evaluate your business. Utilize a two-stage process to identify and then correct the issues that plague your business.
Stage 1: Prepwork
One of the first steps any company should take is the review of the company. This is the assessment period. It shouldn’t take any longer than 90 days. During this period, there should be a complete review of the company financials, the infrastructure, the employees and the vendors. It’s crucial to get input from all sides to find out what can realistically be done to save a company. This information will be helpful in deciding the direction to take. It’s also important to review sales, marketing plans and scout the trends for the specific businesses industries.
Research other companies that are succeeding in the industry where the current company is failing. Comparisons can be useful to showcase how the differences between a successful company and your company. Subscribe to industry blogs, and hire analysts to help your company get the upper hand by predicting the course of the market.
Stage 2: The Action Plan
After determining what went wrong with the business and the direction the company needs to take, it’s time to create an action plan. This portion of the plan should take less time. You should need no longer than 30 days to bring the data you’ve collected to your team and start making progress to fix your business model.
If the failure of the business was due to a poor public image, you’ll need to run marketing campaigns that are designed to repair your company’s image. You’ll need to include changes to all aspects of your business. Be bold about your initiatives, and take the necessary risk to make your business succeed.
- Hire new leadership or get additional training for your current leadership.
- Find new sources of revenue or find way to cut existing costs.
- Promote the relevancy of your product and get it into the right markets.
- Create a program that provides consequences for employees who don’t produce and managers who don’t motivate.
- Make amends with current and past customers and assure them that the changes to the company will improve your product or services.
Building the Right Team
The process of fixing a company can be long and involved, but it’s necessary if you want the company to succeed. When you have the right team working with you, then the process is made much simpler. Hire the right people, and give them the power to make the necessary changes to see your company get ahead. As the owner, you’ll have to take a hands-on approach and mentor your employees so that they produce the results you need.
It doesn’t matter if you have the best brand in the world. If Apple Computers didn’t have the marketing and reputation for stellar service, they would not be able to succeed as a company. The techs have been designated as Genius’s. Employees are viewed as partners and they strive to provide superior customer service. Starbucks is another example. They call their employees partners, and they stand behind that by providing good benefits and an option to buy shares of stock. Without the right team that is motivated to succeed, your business will ultimately fail.
The Road to Recover Isn’t Smooth
Some of the issues that have hampered your business won’t be apparent at first. The goal during the initial 120 days is to create new policies to drive the company forward because the old policies obviously failed. Corruption and other skeletons in the closet can be sorted out by providing strict policies and enforcing them effectively.
You may find yourself in the middle of a lawsuit. A customer that provides you with a majority of your income may pull out. Regulatory and product issues may cause setbacks. This is why it’s so crucial to constantly foster relationships. Put your energy into developing relationships with your top customers, but also nourish the other customers as well. You’ll need everything you’ve got to pull your business back.
Understand It’s Not Just Finances
Finally, understand that while financials are important, it’s not the thing that ruined your business. If you have a good exit strategy, you can overcome any financial crisis. It’s not going to be pleasant to see your business fail, but this doesn’t mean you can’t still make a profit if you sell the company in time. When a company with deeper pockets is looking at your company, they may be less concerned with how well you’re doing and more concerned with how good the product is.
Don’t negate the value of your company. If you have a long reach, this can go a long way when attempting to sell the company. In 2016, it’s important to focus on current marketing technologies. If you’re not using digital technologies, then your business will fail and get left behind. It’s also important to be able to look ahead for the next five years. This will ensure you can stay relevant with your offerings.
Ultimately, the decision to turn your company around depends on the type of business you have and the services or products you offer. By taking careful stock of your strengths, weaknesses, and overall financial picture, you can prepare for the future. Place a high value on your employees, and make sure your marketing is cohesively attempting to market your brand. Everything down to your email responses to customers should take on a company tone. Your company can succeed if you just implement the right policies and strategies to excel in 2016.
Gerry David is the CEO and President of Celsius Holdings. A seasoned executive with over 41 years in the business sector, his focus is in startups, turnaround and rapid growth. At 27 he opened his first startup, growing the company to cover 6 states before going public. He has over 20 years of experience in the tech sphere, having held executive roles at IBM, Honeywell, and GTE, among others, and more than 21 years’ experience in consumer products. He’s personally led 3 startups, overseen turnarounds at 5 companies and successfully managed businesses spanning 72 countries.