Do You Need A Business Turnaround?
By John Crawley, owner, The Finance Expert
If you Google “Turnaround” you will find it is the name of Westlife’s fourth album. You will also see images of cartoon characters, facing in various directions. If you ask a group of people to say a follow on word to “turnaround”, you will get words like:- look behind you, look at me, roundabout, head-turning.
In business, I define “Turnaround” as setting a business on a course that’s right for it. It’s a common mistake to assume that a business that needs Turnaround, is in trouble. Not so – Turnaround is a useful tool to help a good business change course. Turnaround can help an owner of an SME to redevelop, expand, contract, or focus on new business opportunities. Alternatively, Turnaround can help the owner to exit and let the business continue.
When I meet a new prospective client, particularly those who are in struggling businesses (which is the majority of calls one gets at the moment), I ask three questions:
1. Was the business ever a good idea
2. Have the owners the energy to keep going
3. Can they pay me
For struggling businesses one of the main challenges is helping business owners to get past the paralysis and lack of confidence in their decision making ability, brought on by watching losses build up. Taking risks is an important part of getting your business back on track. Risks need to be well thought out and carefully managed, to capitalise on the opportunities that are out there for your business, if you can act.
A key question in any turnaround is “What would you do if you were not afraid?” – Dr Spencer Johnson (Who Moved My Cheese).
For all businesses tough times are a great health check. If your attention has strayed to non essential aspects of your business, you get clear feedback from a difficult market.
It’s time to refocus on how your business generates revenue, and how little your operations could, or should, be costing you. Are you clear on how much value all of your business activities add? If any of the activities you invest your resources in are not pulling their weight by securing sales, increasing your customer base or allowing you to cut costs, they have to be re-examined.
If you are suffering more than your competitors, what are they doing differently? Is there anything you can learn from businesses in other industries and how they are dealing with the challenges they are facing?
There are as many opportunities in a downturn as there are dangers, they are just a little better disguised.