Turnaround Management: What do I do if my Business is Failing?

A lot of businesses get into trouble from time to time and its important to have processes in place for dealing with trouble as it comes. Fortunately, we have detailed templates and checklists for this. For the purposes of this article, I'm going to summarize the processes that take place.

1. Assess and Stabilize. Start by assessing the financial position. The business may have cash flow management issues that need to be resolved; it may be necessary to contain costs (reel back marketing spend, freeze hiring, etc). The specific actions taken should reflect the internal and external environments- marketing spend probably shouldn't be cut if the ROI is above expectations. Make sure you communicate with your stakeholders if necessary.

2. Deeper Diagnosis. The previous actions may have been urgent. Once the situation is stabilize, you need to dig through and find out what is wrong. Review your revenue drivers, the sales pipeline, inventory management, accounts payable terms, the market and competitive environment, the organizational culture, etc.

3. Formulate Strategy. Based on the diagnosis, be prepared to answer, at least, the following questions: What do we need to do? How are we going to do it? Who will do what? When do we need to have this done by? You will probably also want to develop plans for reassessment and adaptation, among other things.

4. Execute, Monitor, Move Forward. The bulk of the urgent problem solving is out of the way. Hopefully at this point, the business cash flows are stable and the business can focus on its potential redirection.

The problems in turnaround management are sometimes relatively straightforward. One of the projects I worked on had a working business model, in an industry that was growing, and just had obviously poor management. Identifying the issues and planning to move forward was relatively easy. It is my opinion that turnaround management becomes difficult when a larger overhaul is required- the business model won't work, a structural change occurred in the market, and so on.

These require more creative and sometimes less well established solutions, as the market develops potentially brand new problems. Under those circumstances, you'll probably want a guide that understands whether or not the issues are likely to be temporary or sustained, and, if sustained to help navigate some kind of lateral movement.

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