Tuesday, October 14, 2008

9 Steps to a Successful Business Turnaround

9 Steps to a Successful Business Turnaround

If the business is not working out as planned then it may be time to investigate what to do to turn the business around. There are 9 basic steps that a business owner should follow to succeed.

Many owners of small and medium sized businesses have successfully used these steps to improve their business results.

Step 1: Write up proper plans.
It is absolutely critical that your business has written plans relating to your operation. Companies who develop and follow their plans on a day to day basis generally never get into trouble. The plan is the roadmap for your business. Your plan makes it easier to detect when you have run off the road and what you have to do to get back on. It prevents your business running into difficulties from which you may not be able to recover.

Everyone involved in a business - management, employees and the business owners - need to understand the business’s future plans as well as how to achieve the objectives of those plans. Each person needs to see how they fit in and what they have to do to assist in meeting the targets. Many people value the opportunity of putting forward suggestions, ideas and skills from their own experience that may help turn the business around.

Step 2: Keep contact with the key staff and directors.
When things are tough and a turnaround is needed, get together your key people and have a “no holes barred” brainstorming session focused on how to fix things. Don’t go into a meeting without a plan because people lose confidence in leaders who lack a plan and who have no vision for the business.

Present yourself as being self-assured, open minded, flexible. Listen to your key people as well as other advisers.

Step 3: Keep in touch with your staff.
Your people are the most important asset that your business will ever have. People make the business. Nothing can be achieved without the skill employees and managers bring into the operation. Where necessary meet with everyone and explain the current business situation. Try to find out what others think. See if anyone with expertise can throw some light on what is going wrong and together agree on possible strategies to improve the position. You may be amazed at how employees and managers will rise to the challenge of volunteering their input when asked.

Step 4: Meet often with your customers.
It’s a small world out there and many rumours abound. You don’t want loose speculation flying around the business community about the problems your business may be having. You don’t want your key customers to become nervous. Some may start looking for other suppliers if they suspect things are not good. It is important for you to stay close to your customers and keep them informed of the situation. They need to know that you have the matter under control. They need reassurance. They need to see that you have a sound plan to correct your current state of affairs. They need to know that they are not endangered financially in any way

Most customers will work with you because you are also part of their own business. They are dependent on you to supply them with the products that they need. Don’t go into detail, but simply inform your customers of your situation and how your business is planning to correct the temporary problem. It is important to be reassuring and confident, but it’s not necessary to go into detail.

Step 5: Meet with your suppliers.
Suppliers get very nervous when they hear on the grapevine that one of their customers may be having problems. Gossip and bad news travel faster than good news, so be aware that some people need to be alerted quickly before things get out of hand.

Once again, prepare a statement to your suppliers of the temporary problems your business is facing. Let them know about the plans you have to correct the situation. Most suppliers understand where you are at because many of them have been in the same position in the past. You will be pleasantly surprised at the support you will receive from most suppliers. They will stick by you as long as you are open and not deceitful.

Step 6: Talk with the tax man.
If you find that your situation does not allow you to pay your tax on time, get in touch with the Taxation Department. You'll have a better hearing from them if you are upfront with everything. Most tax departments will work out a strategy allowing you extra time to meet your tax obligations.

Step 7: Keep close to your bank.
If you need more funds and you have a loan in place or a line of credit, talk to your bank manager or loan officer. Let your bank know what your needs are. Don’t write. It's best to deal with these things face to face. Give them the bad news, but follow this up quickly with your proposed plan of action. Be confident and reassuring. This will guarantee you a better hearing and co-operation.

Step 8: Retain the staff you need.
Sometimes it is too much stress trying to look after all staff if there is not enough money coming into the business to pay everyone. No one likes to let people go, but if the business is to survive you may have to retain only those who are essential for producing the products or making the sales.

Step 9: Reduce all costs.
Sit down and make a list of all expenditure in your business. Eliminate what you can do without. Some expenses can be put forward to the future. Other costs can be reduced immediately without affecting the business operation. Sometimes it's not always a matter of trying to generate additional sales or income. Sometimes the more drastic action of cutting expenses mercilessly can fix the problem overnight.

1 comment:

abanglong said...

salam... i love this article. :)