With the world still reeling from the effects that COVID19 has had on the economy, it is even more important to recognise the underlying factors that lead a business to needing a turnaround and restoring it back to strong financial and operational health.
The areas where issues may arise are varied but we have listed a few for you to consider, and some questions to ask yourself.
People play a crucial role in the success of businesses. During “normal” operations, ineffective staff can be “hidden” by the performance of the business and it not until there is a new normal that they are not familiar with exposes their deficiencies.
Whilst gaps in expertise, knowledge, capabilities can be managed when times are good, during times of crisis and economic uncertainty everyone needs to perform optimally to ensure the business’ success.
When considering the status of your business, and you’re evaluating the people, ask yourself:
- Are my people employed in the right position for their role? If not, is it a matter of training and development, or do we need new skills?
- Are my managers and team leaders effectively and efficiently managing their teams? If not, what is the cost of this to the business?
- Is there overlap in positions? Are there roles that are being split amongst multiple people that could be unified into a handful of positions?
- Are the position descriptions clear and current? If not, how fast can I fix this?
- Do I know that my management team is on the same page with our overall position and know where we are heading?
Whilst we look at this as a ‘people’ problem, the issue is more often symptomatic of structural issues within the business. To truly know whether we have the ‘right people in the right jobs’, we need to define what those roles are and their importance to the business.
To start with, the questions we need to ask ourselves in order to evaluate the ‘people’ stage are, do your employees fully understand what is expected of them? Do your employees know what their KPI’s are? And are they operating optimally?
A failure to plan is a plan to fail. A famous quote by Benjamin Franklin, but never truer than in this new normal
Having a well thought out business plan allows the owners, executives, employees and other stakeholders, to be aligned on expectations and outcomes. This plan should constantly be reviewed and updated to ensure it’s validity.
A well-structured business plan needs to cover both the finance and operations of the business and it’s intended growth trajectory. Risk management and competitor analysis need to be considered as well.
As you think back to your business plan, does it cover:
- The key clients (or client archetypes) you are pursuing?
- The sales and marketing strategy to attract and engage these prospects?
- The operations of the business and ‘the how and why we do what we do’?
- The finances of the business?
Business owners and executives should constantly refresh their business plan to address the future and its impact on their business. Whilst this may appear daunting, having the right team by your side to work through this makes life easier.
In business, you need the right processes supporting your people.
Clearly written, simple and systemised processes allow for the smooth operation of a business. This means that people know what the next step is and there is less ‘guess work’ or variation in the output. Without systemised processes, it is easy for inefficiencies or poor product to creep in. These erode productivity which then flows to profitability.
Considering the key processes of your business, are they:
- Easily accessible so people can read them as required?
- Are people trained on these throughout the business? And then are they retrained at regular intervals?
- Are the processes constantly being reviewed for completeness and whether they are still appropriate?
- Updated in accordance with required legislation?
Understanding your processes means that you understand where there are strengths and weaknesses throughout the business.
The product being offered is defines the business. In good times it is important that a business continually evaluates, refines, and redevelops its’ products. This is never more important as we enter the new normal.
As consumer demand shifts and varies, the need for your product may ebb and flow. Seasonal changes, shifting market dynamics, and differing consumer needs will all affect the volume of purchases being made.
When reviewing your product, the areas to consider are:
- Does the product fill a gap in the market?
- Does the gap that it filled when first created still exist?
- How is your product different to products that already exist on the market?
- How do you give your product a competitive edge?
Problems arise when a business doesn’t keep up with shifting demands, whether they are technological, economic (market), or seasonal. Ever more so, businesses need to ensure they are differentiating themselves in a highly competitive market. A business failing to accommodate these changes may lose their customer base.
Working with experienced practitioners who understand the need for new product development, and the best way to implement it helps revitalise your offering moving forward.
Profit – without it – the business will ultimately fail. Sometimes business owners and executives only keep a close eye on the profitability of their business. The danger in only looking at profit is that it is a lag indicator.
Whilst it’s easy to look at a set of financial statements and notice the decline in profit, or even to track the trend in the decline, it’s far harder to ascertain the systemic issues causing this.
Whilst significant shifts in the economy can cause sales to slow or stop and therefore cause a loss, what is usually not looked at is a consistent decline in profit which usually points to other factors at play. To ascertain where this stems from, a complete root cause analysis and evaluation of the business is required.
There are only two questions to ask yourself upon recognising a decline in profit:
- Is this a once off or is there a systemic problem here?
- Is the situation redeemable or is formal external administration required?
Depending on how soon you act is how likely we can help the business.
Business turnarounds are carefully considered rapid change management projects. They require time, patience, and resources. Using turnaround consultants early, who are well experienced in these situations, significantly helps the recovery process.
With anything in business, a carefully considered timely resolution is best. Acting too late will, more often than not, mean that the business will need to enter external administration.
Callsara Consulting Group has worked with numerous businesses aiding them through troubled times over many decades. Contact us to find out more.