Develop a Turn-Around PlanNo matter what your political affiliation or ideology, one thing we can all count on is CHANGE. The business landscape is rapidly changing. The predictability in our system of private enterprise is under attack by government reforms through real, perceived and eminent changes in taxation, investment, free trade, regulation, social systems, cost shifting, government spending, foreign affairs, nationalization of once private companies, health care reform, labor reform, education, energy and unionization to name just a few. The fallout is business, investor and consumer confidence being shaken to its core and a small business has or is beginning to feel the impact.
If that weren't bad enough, Congress is currently proposing legislation to penalize targeted private businesses, through taxation and other means, on a retrospective and prospective basis who exhibit behaviors, business practices and act the way Congress doesn't like.
As Congress selects the winners and losers, and if your not selected as a winner and there is no bail-out for you, the following information should be helpful in building your own turn-around plan!
Let's get to work.
SO WHAT CAN YOU DO? The ancient Chinese recognized early that change represents opportunity for those who are proactive, but also offers danger for those not well prepared.
So, how do you know if you are prepared? Compare your current situation against these type characteristics:
- You have no formal written plan;
- Your credit is tight;
- You have trouble finding, attracting and retaining key talent or skilled workers;
- Your banking relationships are strained;
- Customers are reluctant to buy your products / services;
- Profit margins are shrinking;
- You have a lot of doubt and uncertainty about what steps to take next;
- Sales are down and advertising isn't working;
- You don't quite know where you are;
- Customers are demanding more;
- Account Receivables are creeping up;
- Cash is short and vendors are calling to collect.
How do you continue to thrive when faced with any one or combinations of these type or similar conditions?
Consider fighting back with a turn-around plan. A turn-around plan will increase your confidence and provide a solid roadmap for you and your stakeholders that:
- Provides you with a clearer focus of the future;
- Streamlines your next steps;
- Provides a more effective structured way to operate;
- Gives you and your organization a guide to reach a higher performance level.
WHO, WHAT & HOW (The 3 components to include in your turn-around plan.)
The first component is the "WHO". This includes the stakeholders of your business. The stakeholder group usually includes your employees, customers, vendors, contractors and any other important outsiders. You be the judge.
Based upon your plan, tell your stakeholders:
- You have a plan;
- How the plan will be implemented;
- How you will keep them informed (i.e. frequency & method);
- How you will mitigate risk;
- How you will measure success;
- Why these actions in the plan are in the best interest of the company and for them.
Most will appreciate our honesty and candor, so it is imperative to take a proactive approach in dealing with the situation. Explain the nature of your problems and tell them in detail how you plan to correct the situation. Be confident and reassuring when speaking with your stakeholders.
Failing to clearly communicate can be the biggest mistake a business owner can make. When we fail to communicate, the stakeholders will write their own story and fill in the blanks. Typically, their stories will not be in your best interest.
In addition, be sure to follow-up with the stakeholders on a regular basis or on the agreed upon intervals you establish with them.
The second component is the "How". Four key areas that must be part of your plan include:
- Expense Control
- Marketing & Sales
Funding: Determine what options you have to refinance your operations. Explore all your options carefully. Methods can include:
- Internal Funding
- Existing Funds
- New Funds
Expense Control: Consider cutting out all the fat. Take a thorough look at all expenses. If the expense doesn't contribute to your profits or to your customers' satisfaction, you should eliminate it.
Pursue price concessions vigorously from your suppliers. If you cannot get permanent price reductions ask for temporary reductions. Create a win/win situation if possible. To do this make sure you completely understand what pressures the supplier is facing; what is important to them and what they need from you. Do your homework in advance.
If the supplier refuses to work with you, find alternative sources. Don't hesitate to blame your Business Coach.
Operating: Businesses fail because the owners don't have information. It is important to develop a business dashboard so the business can be monitored on an ongoing basis and data compared to a standard of desired business performance. Much like the dashboard on a car that contains gauges that provide the driver indications of condition of the vehicle and its major parts, so does the business dashboard tell the owner the condition of the business. This data provides you with the ability to make good decisions. Data can include but is not limited to:
- Financial Data
- Performance Data
- Customer Data
- Market Data
- Technology Data
- Marketing / Sales Data
- Production Data
Find the data that is most important and build your reporting system around it. Learn how to respond to the data and take actions that will constantly enhance and improve your profitability and performance. Start with the most critical data and build your system from there. Be informed and flexible.
Marketing & Sales: Crank-up your marketing and sales efforts. Now is not the time to throttle back. Use Guerrilla Marketing tactics. Select niche markets and position your business for a rebound. The biggest mistake is made when business owners cut marketing expenses first. Cut only those areas where you aren't getting the Return on Investment you desire. But be careful to analyze how the combinations of the strategies play out in delivering customers. Review this area very carefully.
The third component is the "What". The "What" is your product and your customer. Look for areas where you might want to reorganize your product and customer mix in order to:
- Enhance areas most profitable
- Maintain areas of strategic importance
- Eliminate money wasters
Obviously, you want to keep the most profitable categories. For the vast majority of companies the 80/20 rule applies. Twenty percent of your customers and products will represent eighty percent of your revenue. Therefore, carefully examine your product mix and customer base. Keep these products and customers. Clone them if possible.
The second category is strategically important products. For example, keep those products that drive value and traffic but without losing any or too much money selling them. Ask yourself, does this product help us maintain a profitable business? You may not want to actively grow this area but now is not the time to eliminate it either.
The third category are products/services or clients that are money losers. These cost you too much to maintain. Once identified, TAKE IMMEDIATE ACTION. ELIMINATE THEM NOW!
Top performers, most visible are sports athletes, typically rely on a number of advisors. Consider hiring a business coach and/or developing a group of objective advisors.
Olympic Athletes all have two things in common. The first is that they are all top performers in their area of competition. Second, each and every one has a coach to hold them accountable to achieve their goals, share knowledge of what to do when and provide an unbiased objective perspective and feedback on their performances.
ThistleSea Business Development provides business owners with this advantage. Set-up an appointment to talk with a ThistleSea Business Development Coach today and Fight Back with your own turn-around plan!
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