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7 Steps to Turning Your Business Around

The first thing you need to do is to review and assess the present situation. In any business turnaround it is important to understand the starting position fully. It’s also important to gather objective and subjective data in order to review the situation and to determine the causes, as well as to understand the immediate effects of
the issues impacting the business.

1. Robust strategy and plans
Robust strategy and plans Management accounts, the sales order book, financial arrangements, internal controls, customer service levels, quality and leadership skills are typical areas that need to be evaluated
and reviewed. Then develop your business strategy and plans. For the business turnaround to be successful, you need a robust strategy and plans that will achieve success.

2. Communicate with key employees
For the business turnaround to gain momentum it is necessary to meet with managers and key personnel. The current business affairs should be explained and the consequences of not taking corrective action should be made known. Communicate with other employees. It will be necessary at the earliest opportunity to meet with all employees or their union representatives, particularly if job losses are planned. A prolonged period of uncertainty, fuelled by rumour and counter rumour, will not be beneficial to the business and whilst bad news may not be easy to deliver, the communication of it in a timely sensitive manner is desirable. Meet the bank. The bank and other parties with a financial investment in the business should be advised of the business turnaround plans. If possible, meetings should be arranged to discuss the plans and to seek assurances of continued, and maybe, more support for the business.

3. Meet customers
Dependent upon the severity of the situation, it may be necessary to reassure key customers of the business turnaround plans and the benefits that will accrue for them. This action should be considered mandatory if the cause of the business demise has been poor customer service, poor product quality or any other matter not meeting the expected / agreed customer service levels.

4. Meet suppliers
If the business has failed to settle payable accounts on time, even the murmur of business turnaround activity taking place may result in suppliers imposing stiff payment terms that may jeopardise the business turnaround recovery plan.

5. Cash conservation
Review and improve if necessary the credit management procedures.
If possible negotiate extended payment terms with suppliers; examine thoroughly all unused assets of the business and liquidate if necessary. In addition eliminate all unnecessary overhead cost.

6. Implement new / update systems and procedures
A thorough review of existing systems and procedures will be required to meet the goals of the business turnaround plan. Implement change if necessary; a continuation of old practices will almost certainly result in the same old results.

7. Monitor, measure and take action
Throughout the business turnaround process, results should be regularly measured against plan, and corrective action taken if required. Key Performance Indicators (KPIs) should be determined that will give a snapshot of the business performance and be available on a daily, weekly or monthly basis.

Post by Paul Davis,

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