We have seen our share of business transformations, business turnarounds and business restructuring.
We have also seen our fair share of businesses falling into liquidation, administration, and business exiting.
So, here are our top 8 tips of how we have lead businesses out of a crisis situation.
1. Focus on Cash
Cash is king. A successful turnaround really can come down to one thing, which is focusing on cash and business cash returns. What that means, is brining a business back to its basic success element.
Reviewing what earns cash and what burns cash.
2. Throw away your view of a company in distress
It is essentially next to impossible to come up with one definition of a company in distress. It is all individual, and based on your own business situation.
3. Force yourself to strategize your own plan, all else fails you need a turnaround consultant
The biggest thing you can do to avoid downturn is to review your own business plan and strategy. When you are physically owning the fact that you are creating them, and actually creating them it is usually more so realistic – you can work on previous milestones, and look at where you are in respect to your industry and competitors.
4. Expect and ask more from your board
The beauty of a board is that it is enough distance from the company to see the bush of trees. Those in charge, leaders and managers often treat their board as a necessary part so they can get on with their business, but that undermines the boards role as an early warning system when a company is headed for distress.
5. Treat every single turnaround like a company in distress
Without a crisis mindset, you get a stable company company’s response to change: Risk is to be avoided. In a crisis and distressed situation demands significant, critical action.
Bold actions make you grow.
6. Throw out the old
Management incentives are the most overlooked tool in a business turnaround. Many times, they are so complex when you ask leaders what they have to do to earn their bonus or incentives, many will say “someone will tell me at the end of the year.”
Have a straight goal, EG sales staff to each hit $15 million in sales and have a handsome structure in place for motivation.
7. Replace a top leader
From our experience in business turnarounds being a success, most involve changing out 1 or 2 top leaders. This isn’t because they are bad. Its practical, if a business is not performing, then these leaders must own the decline, most times they are also incapable of the shift mindset that it takes to make quick, important changes to operations.
8. Find talent and retain them
Beyond the leadership and finance team, there are two types of people we look for.
Firstly, are those that have institutional knowledge.
Secondly, from my experience, in most occasions the value is not at the front of the table on the initial turn around, but usually great leaders are found 2 or 3 levels down waiting for an opportunity, know the business in and out and have a hunger and drive to move the business.
If you are in need of a Bookkeeper, BAS Agent, Turnaround Manager, Turnaround Consultant, Turnaround Advisor, Turnaround Specialist, Business Transformation Specialist or looking into CFO services – vCFO (Virtual CFO) | Interim CFO | Part Time CFO | Full Time CFO | Interim CFO 5ivestar Business Services can support you through your business turnaround.
5ivestar Business Services are tax agents located in Carina Heights on Brisbane’s Southside. We service all areas of Brisbane, Ipswich and the Sunshine Coast for tax, BAS and bookkeeping. We also practice as virtual CFOs, take on interim CFO engagements as well and financial management, reengineering and restructures including business turnarounds and transformations and expert financial modelling.
Let’s chat about your business today https://5ivestar.com.au/contact-us
P: 07 3084 3692