A typical process can be attempted internally, but many times the existing leadership is a significant part of the problem to start with. That’s when a turn-around expert may be needed. They can come in the form of an external consultant, or as an interim CEO, CFO or COO.
Step 1 – Leadership Change
Since the need for the turn-around is most often identified from outside the firm (board of directors, lending institutions, shareholders, etc.) the first step is frequently a leadership change or addition. Rarely do existing leaders openly admit they need outside help. The contagious “optimism” that helped them start and grow the business may be exactly what is killing it now.
Step 2 – Fact Finding
Identifying, recognized and diagnosing the severity or significance of the issues is next. This is critical. Not only is it critical to assess the issues accurately, but they must be tackled quickly. Spending too much time in this phase can easily result in a downward spiral making the turn-around even more difficult if not impossible.
Step 3 – Build the Plan
This can be the overwhelming part of the turn-around. It can include incorporating the results from many different analyses. Areas potentially to be addressed will include financial, sales, marketing, operations, engineering and customer service. Details will most likely be focused on generating the necessary cash flow to implement operational change.
Step 4 – Execution and Implementation
Accept early on that the plan will change as the execution unfolds. Organizational changes will be implemented. Change management is crucial. Negotiations with vendors and customers are inevitable. Effective communication with shareholders, lenders, and employees is the key to any successful turn-around effort.
Step 5 – A Re-Defined Focus
Now that the business is generating cash, it’s time to roll out new marketing strategies, new products, and re-establish R&D organizations. If completed correctly, there will be a new passion throughout the organization based on a shared vision of the future. Key performance indicators will be in place and used to monitor each area of the business. All employees will be growing professionally and personally. Customers are bragging and competitors are nervous.
Photo credit to Richard Tilney-Bassett