Ten Steps to a Successful Turnaround
To implement the ten keys in a successful turnaround, you have to perform, in order, the following ten steps. Owners of small- and medium-size businesses have successfully used these steps.
Step 1: Write
business, sales/marketing, and operation plans
We will go into greater detail about the value and structure of a business plan in Chapter 2, but for the purposes of this list we will talk about the importance of written plans. Rarely do companies who write and maintain plans on an annual basis get into trouble. Plans chronicle the good and bad of the past and set a vision for the future.
Investors, management, and employees all need to know what the company’s future plans are. They need to see where they fit in, how they can help, and to share suggestions based on their expertise that will help the company succeed.
Step 2: Meet
with key personnel and a board of directors or advisors
You must get the key people in the business together to have a no-holds-barred discussion on how to fix the company. Don’t go into the meeting without a plan of your own. People lose confidence in leaders who lack a plan and vision for their business. The key in this type of meeting is to be self-assured, open-minded, and flexible.
Step 3: Revise
After listening to key executives in the business, revise and ask key executives to review the plans a second time before presenting them to the board of directors and employees.
Step 4: Meet
Have a company meeting, admit that there are things wrong with the business, and discuss how management plans to fix it. Provide employees with a copy of the company business plan and ask for their input. For an established business, this step demonstrates that careful consideration has been given to the development of the business.
Step 5: Meet
Rumors of your imminent demise are swirling around the business community. Key customers are becoming nervous and some are even looking for new vendors. Don’t stick your head in the sand. Inform your customers about your situation and tell them how you plan to correct it. Be reassuring, but not deceitful.
Step 6: Meet
Company vendors get very nervous when they hear “on the street” that one of their customers is having trouble. Sometimes word travels faster than you can thoughtfully alert the appropriate people about your problem. With that said, you need to develop a prepared statement outlining the problems and how you plan to deal with them. You will receive plenty of concerned telephone calls. Respond quickly and thoughtfully to all of them.
Contact tax authorities
If you can’t pay your local, county, state, and federal taxes, notify the authorities. Tax authorities will work with you. You’ll be on much better terms with them than if you fail to pay and have it appear as if you are trying to avoid your obligation.
Contact your bank
If you have loans or a line of credit, call—don’t write—your loan officers and tell them you need to meet in person. Give them the bad news followed by your plan of action. Appear confident and reassuring.
Step 9: Keep
only employees who are essential to the business
Figure out which employees you can let go without damaging your business. Nobody likes to let people go, but for the business to survive you want to keep only people who are bringing in, making, or servicing sales.
Step 10: Cut
Make a list of all your expenses and eliminate what you don’t need. You need to buy time in order to fix your problems, and cutting expenses is a good way to buy “financial” time.