June 4, 2010 by Frank Goley, Business Consultant
The most important parts of a Turnaround Strategic Development and Deployment are leadership (which we discussed in detail in my previous blog posts), experience and expertise. As I also discussed in a prior blog post, the success of a Turnaround Plan rests with the people on the Turnaround Team and their ability and willingness to incorporate all Company’s management and employees in the process. It is important to have Process structure which can achieve this. As a Business Consultant, I understand process, but I also understand the importance of experience and fresh ideas in a turnaround situation. It is the expertise of an experienced Business Consultant who can adapt process to a particular situation in order to find unique, creative, successful solutions to a tough situation, using the strengths and experience of the Turnaround Team and the insights of Company Managers and employees, finally putting it all together in an agreed upon, synergistic, effective Turnaround Strategy, Plan and Program.
Going into a Turnaround situation as a Business Consultant, I find that the processes I use to find solutions and options are very similar to the one’s I use when I consult with a non-turnaround Company, except for a few critical differences, like the time factor or creditor pressures; however, I find similar factors and pressures in non-turnaround companies as well. I go back to the point I made in the first paragraph, you cannot hire a Business Consultant soon enough in any stage of business development or situation your Company may presently occupy. A Business Consultant should be part of your Company’s success team, just like experienced Management is a key piece of a Company’s success.
You will find that this portion of the article on Turnaround Strategy is very similar in some parts to our article, What does a Good Business Consultant do?, because the processes employed in structural terms are similar when used in a converse situation and then tailored to the particular turnaround situation. The most important thing a business consultant should do upon entering a turnaround situation is to listen, get to know everyone throughout the organization and give them opportunities and avenues to communicate to you, along with the Company CEO. The Company CEO should be doing the same exact thing alongside the business consultant to instill trust, integrity and openness to the turnabout process. If the CEO does not hold a position of high esteem with the employees throughout the organization, it is time for him or her to go and be replaced by either a CEO who specializes in turnaround situations or promote someone from within that has this relationship with the Company’s people and can adjust quickly to being an effective CEO. With this trust and integrity established, it is time to get to work.
Steps to take in a TurnAround Process
Ø Step One: Learn about the Business
ü Tour the facilities and meet the people. Spend plenty of time talking to the employees explaining the role of the Business Consultant and Turnaround Team. Encourage Feedback.
ü Business Consultant meets with the Board of Directors, Executives, Founders, Owners, Department Heads, Managers and Key People.
ü Assemble the Turnaround Team.
ü Get a firm idea of the Company’s history, passions, successes, failures, competitive advantages, processes, organizational structure, trademarks, patents, intellectual property and so forth to fully understand the life blood of the business.
Ø Step Two: Meet with Advisors, Creditors, Customers and Suppliers
ü These critical turnaround players need to have a firm understanding of the turnaround team’s goals and objectives.
ü Establish credibility.
Ø Step Three: Evaluate the Problems and Issues
ü This can only be done effectively if Step One, spending time with the managers and employees, has been accomplished.
ü Determine timing factors from the outset.
ü Identify, quantify and prioritize obstacles to overcome.
ü Have a clear understanding of what the Market can and cannot support. Give the Plan a believability factor.
Ø Step Four: Identify the most Pressing and Significant Problems
ü Segregate the problems which have the most influence on the turnaround situation and concentrate on those. You can concentrate on the other problems later if your turnabout is successful.
ü Be sure to identify problems as seen by ownership, executives, managers, advisors, creditors, customers, suppliers and most importantly, the employees.
ü Prioritize, again, the pressing turnaround issues and problems. Concentrate on this list and the related areas. Do not get side tracked.
ü Identify the revenue points and expense ratios for the products and services which are involved in these key problem areas.
Ø Step Five: Identify Opportunities
ü Yes, I said it, opportunities. Turnaround Strategy is not all about problems, issues and cutting them out of the organization. That will result in a band aide which won’t be able to hold for very long.
ü Opportunities are what will gain traction with creditors, suppliers, customers and employees alike to bring about positive actions to put the Company on a healthy track or at least have a fighting chance thereof.
ü Opportunities can be hidden but can effectively be flushed out with a good process and they don’t have to be time consuming to exploit or have to be too resources intensive. Because, in the end, restructuring and cost cutting alone will not bring about lasting success for a turnaround Company and its creditors, suppliers & customers know that.
ü Get a firm understanding of the resulting margins these opportunities could present, and whether existing products/ services can be used or need modification. Note, modification is the key word here. You will not have the time, resources or support of the major players to develop new products or services.
Ø Step Six: Analysis
ü At this point, you must conduct market research and customer inquiries to determine if the market will support the assumptions you have made in the Opportunities Identification step.
ü Make sure any supported opportunities have a good fit with the current business’s structure. Can it be done?
ü Pick out the opportunity or two or three which can be implemented quickly, efficiently and economically.
ü Go back to your prioritized Problems list and identify strategies to employ which will cut expenses, restructure and bring the problem/ issue back in balance.
ü Compare the key opportunities & Problems to determine if they are counterproductive and whether you can simultaneously implement them.
ü Identify and link certain issues and problems. Clear winners are those which readily relate. Keep the others “on ice” until and unless necessary. Exponential results of linking Problems with opportunities will be far more effective than divergent Opportunity and Problem strategies.
ü Best advice: Remember that Turnaround Strategy is not all about cost cutting, problem identification and re-structuring. Successful Turnabout Strategies are those which have lasting effects and are not just reactive. Proactive Strategies will ensure the Company has a future, has a fighting chance and has opportunities in the market to quickly exploit. Identifying and fixing problems are easy and temporal (i.e. the band aide effect); opportunities and successful exploitation of them brings lasting change; a change which may or may not be completely successful but which gives the Company and its employees a fighting chance.
Ø Step Seven: Resource Audit
ü Do you have the right mix of skills, experience, management and people to suit the turnaround strategy? If not, can you acquire them? Cost?
ü Financial Audit: Do you have the necessary financial structure and resources for plan deployment? Is additional finance necessary, available and timely?
ü Develop Cost Minimization Strategies for the deployable resources.
ü Develop Contingency Resources.
Ø Step Eight: Risk Assessment
ü Are the risks involved in the Turnaround Strategy manageable?
ü Identifying critical milestones which will minimize the plan’s overall risk.
ü Reprioritize the Strategy by plugging in risk factors and milestone achievement factors.
Ø Step Nine: Develop the Turnabout Solutions and the resulting Business Strategy
ü The Turnaround Team puts together the final Turnaround Plan, which provides step by step solutions and exploits opportunities.
ü The resulting Plan clearly shows how expenses can be minimized and certain profit areas will be maximized.
ü A Business Strategy is developed which lays out important schedules, milestones and resource deployment to successfully implement the Turnaround Plan. This Strategic Plan clearly shows customers, employees, creditors and suppliers how these changes will directly and positively affect them. The Plan is backed by an experienced Turnaround Team, solid Analysis and Excellent Forward- Looking Market Analysis & Planning. Lastly, the Strategic Plan will show how the Company will re-establish its Competitive Edge in the Market place. Sell it!
Ø Step Ten: Acquire and Leverage Needed Resources
ü Establish control systems and mechanisms.
ü Clearly understand the motivations of Resource Providers.
ü Understand that Financial Resources are mostly a question of structure, as good structure can minimize resulting costs and be strategically leveraged. An expert Financial Consultant is absolutely necessary.
ü Look to fill human resource needs inside the company before going outside. Too many outsiders can breed distrust and unmotivated current employees. Build in incentives and profit sharing to cut human resource salary and benefit costs.
Ø Step Eleven: Deploy and Don’t Look Back
ü Confidence, leadership and direction are key at this point.
ü Hindsight is 20/20 and looking back won’t help. You have a good plan; people are sold on the plan; look and implement the plan.
ü Deploy Management Systems, Control Systems and Performance systems.
ü Re-work/ adjust the Turnaround Strategy and Plan as necessary as you progress and learn better, more effective strategies.
ü The Turnaround Team should meet on a consistent basis and ensure the Turnaround Plan is being implemented as agreed and schedules are kept. The Team keeps close communications with employees, customers, suppliers and creditors, updating them on progress and changes.
ü Management is fully delegated and trusted to implement the Plan.
Ø Step Twelve: Obtaining and Distributing Value
ü Along the way, when Plan milestones and successes are met, harvesting options should be considered and deployed to meet company obligations.
ü Should have a clear understanding and agreement among all parties involved and contained in the Turnaround Strategy exactly what factors will trigger or prevent a harvest, and how that harvest is to occur and value distributed.
ü This is the stage to remember who got your Company to this point (don’t forget about them):
1. Your Employees
2. Your Managers
3. Your Resource Providers
4. The Cooperation of your Customers, Suppliers and Creditors
The End Game
If you follow a similar process as prescribed and have a strong leadership qualities and skills, then, more often than not, will the Turnaround Plan be successful. However, it isn’t always so; sometimes it is too little, too late, depending on the activity and stage of the dire situation. If that is the case, a Major Re-Structuring, Quick Sale, Bankruptcy, Liquidation or other end result will become the End Game, replacing the Turnaround Strategic Plan with a business dismantling Strategy. While this can leave a hollow feeling among the Turnaround Team, you will find that if a good Turnaround Process was developed and implemented, yet failed, employees and customers will understand. They will adapt and move on and so should you. Holding on to what “could be” is toxic to any future career or new venture. Knowing you deployed a good Plan and gave it your all has to be and should be enough for you and your employees to move on to a productive future. While many may see this as failure and defeat, as a Business Consultant, I see this as a learning experience. Something which will not be revisited as owners and employees alike clearly understand, in the end, how they got there. The learning experience is invaluable and should be leveraged into many successes in the future. But remember, if you follow a good Turnaround Process, with an experienced Turnaround Team, the end result will very often lead to great success and renewed future growth.
Three things I want to leave with you, which are critical to the success of a Turnaround Strategy and Plan:
Ø Business Consultant’s Importance: An experienced Business Consultant should head up and coordinate the numerous roles, duties and responsibilities of the Turnaround Team; not the business owner, CEO, lead investor, turnaround specialist, interim CEO, Board of Directors or Key Advisors. It is the experience, objectivity and expertise which a good Business Consultant can employ to effectively manage a diverse team of Turnaround Experts and Players. Give the Business Consultant the authority and negotiating room to achieve this and ensure the entire team is on board with this structure. The Business Consultant is the one player who can be objectively accepted by all the parties involved in the Turnaround Plan- utilize that synergizing power and advantage.
Ø The Turnaround Team Runs the Show: It is the team’s role, responsibility and authority to ensure the Plan is well implemented, re-worked when necessary and performance controls are in place along the way. However, remember the Team’s accountability to the employees, owners, investors, suppliers, customers and creditors is paramount. Clear lines of authority and responsibility are critically important for the Turnaround Plan’s success, but the team must delegate and trust management with the day to day implementation and management of the Plan.
Ø Gut Instincts: Gut instincts are so very important in a turnaround situation. Process works and is fine and dandy, but turnaround talent also depends on excellent business instincts. This is where experience plays a major role. Recruiting experience up front into the Turnaround Team will increase the “gut” factor and be the most successful element of a Turnaround Process, Strategy & Plan.
Please Note: This is a general outline of a Turnaround Process to employ but must be adapted and expanded for the situation at hand. This is a good starting point but by no means the final, resulting Turnaround Process.
Posted in Business TurnAround Strategies.
June 3, 2010 by Frank Goley, Business Consultant
In my last blog post, I wrote about Business Turnaround Leadership Qualities. Good Leadership is absolutely essential in a business turnaround situation. Depending on your role, the entire Company is looking to you for direction, options and a viable future. It is good leadership that gets a Company through the tough times. In this blog post I provide some valuable leadership tips that can be applied to the Company CEO, Turnaround Specialist, Business Consultant and / or the Interim / Turnaround / Restructuring CEO. Extensive experience within the Turnaround Team is essential, but it must be linked with excellent leadership. Having previously discussed the essential qualities, characteristics and traits of a good Leader, in this post I will examine Leadership skills and roles to employ in order to successfully execute a Turnaround Strategy.
ü Earn Trust and Instill Confidence: Give it to the employees straight on and be completely honest and straight-forward with them. Win them over- you can’t have a successful turnaround without having the “soul” of the Company behind you, the employees.
ü Openness, Frankness and Honesty: Carefully and fully disclose the entire situation to Company Management and the employees. Develop a reputation for being completely open. This gives employees a realistic picture and expectation, making them more willing to sacrifice for the good of the Company as a whole.
ü Integrity: The turnaround business is ALL ABOUT integrity and ethics. It is NOT ABOUT quickly slashing numerous jobs, selling off assets and selling the remainder to a Private Equity Firm. Turnaround is about saving the Company with sound strategies and having the support of the entire company behind the development and implementation of the Turnaround Strategic Plan. Developing a reputation of integrity and ethics allows people to trust and then follow with hard work to make the turnaround a success.
ü Transparency: Secrecy and behind the door dealing are often the chief reasons for failure in a Company turnaround. You need the input and assistance of the entire Company to successfully pull off a Company rebound and turnabout. Transparency of the Company leadership and Turnaround Team is extremely important in encouraging this critical teamwork.
ü Clear Communications: Clearly communicating the Company problems is the first step in winning over the trust, confidence and support of Company Management and Employees. Clear communications play into the transparency factor, dispelling any impression of secrecy or underhandedness. Also, as important, are clear, open communications with customers, suppliers and bankers, as without them, no Turnaround Strategy can succeed.
ü Listen: This is probably the most important skill to have in a turnaround situation. Listen to everyone in the Company- they all have valuable insight, ideas and experience, while also instilling strong ties of trust and confidence between the executive management and staff/ worker ranks. Listen first, advise later.
ü Availability and Accessibility: The Turnaround Team should be available via cell phone and email to all employees. Be sure to answer each email and call people back. Particularly, if done by the CEO himself, this instills incredible espirt de corps, which is essential to a turnaround being successful. Also, it is important the entire turnaround team is accessible as some employees may prefer to speak to certain people, versus going straight to the CEO.
ü Hard Work: There should be a clear understanding throughout the entire enterprise that a lot of time and endless hours of work are necessary at all levels of the Company, without the merit of additional pay, for a Turnaround Strategy to be successfully developed and implemented.
ü Sacrifice: Sacrifice starts at the top and if top echelon of the Company leads by example, then the rest of the Company’s employees will be willing to make the sacrifices necessary to successfully rebound.
ü Control and Performance Systems: Accountability and results are very important in a Turnaround Strategy implementation. Control and performance structure, processes and systems for the Company turnaround must be installed throughout the entire Company. Power and control in the hands of a few breeds distrust and poor results in a rebound situation. Having systems in place to gauge the performance of the Company in terms of Turnaround Strategic Goals and Milestones is quite important to keeping things on track an making sure clear communications flow.
ü Discipline: Once the Turnaround Strategy is developed, you must have the discipline and constitution to see it through. Second guessing and lack of confidence in the Rebound Plan will end in failure every time. Once the plan is developed and agreed on, with the input of the entire Company, have the fortitude to carry it out. This is where having a CEO with the necessary qualities (as discussed in the previous section) is so vitally important.
ü Rewards: A successful turnaround situation will be the most rewarding part of any business career. This is why as a Business Consultant I absolutely love working on a Turnaround Team. When times get tough (and they certainly will), remember the end game and the employees and the turnaround team is accountable to and for.
There should be no fine lines or grey areas. Transparency, honesty, openness, trustworthiness, integrity and ethics are critically important because, remember, that a Turnaround may end in a Re-Structuring, Bankruptcy, Liquidation and/ or Sale if the Company is too far gone to recover. If the Turnaround Team is open and honest from the beginning with employees, customers, and suppliers, then no matter what happens, if your actions were guided by integrity, people will understand and be accepting of the result. And don’t forget this applies to the Banks and Creditors involved. If people lose their jobs, it is important to have in your Turnaround Plan a job placement service, at the expense of the Company, to place displaced employees in other jobs. If you have a good relationship with your bankers, a little money and resources spent in this area is an easy sell, especially if a Bankruptcy Judge and Trustee are involved.
Posted in Business TurnAround Strategies.
June 2, 2010 by Frank Goley, Business Consultant
For the next three blogs, I am going to discuss Business TurnAround Strategies. However, before I get into specific business turnaround strategies and processes, it is important to identify certain Leadership Qualities that a successful turnaround leader has. Whether you are a Business Turnaround Consultant or the Company CEO, these leadership traits and characteristics are important to have in order to successfully guide a company to a turnaround rebound.
Effective TurnAround Leadership Qualities
The leadership qualities necessary for a successful turnaround CEO Team speak to their extensive business knowledge, expertise and experience, which provide the solid foundation for a Turnaround strategy to be successful.
ü Determined and Self- Disciplined
ü Inspires the Troops
ü Makes Timely, Decisive Decisions
ü Has Clear, Concrete, Simple Vision
ü Excellent Communication Skills
ü Street Smart
ü Charisma: Inspires Employees to follow
ü Highly Intelligent, yet has Common Sense
ü Not Guided by Ego
ü Performance Accountability
ü Quickly Learns and Adapts
ü Open to New Ideas
ü Understands Personal and Professional Weaknesses
ü Excellent Listener
ü Actions Implemented with Clarity, Consistency and Commitment
ü Utilizes Different Leadership Approaches and Roles as Needed
ü Tough, yet Exceedingly Fair
ü Humbled by Business Learning Experiences
ü Never forgets who He or She is as a Person
Knowing these important Turnaround Leadership Qualities and skills, the Business Owner can determine his or her weak areas and fill those gaps with a Turnaround Team containing these important leadership elements. The Turnaround Team can consist of:
ü Business Consultant
ü Turnaround Specialist
ü Interim CEO / Turnaround CEO
ü Accounting Firm
ü Legal Firm
ü Public Relations Firm
Depending on the size and complexity of the turnaround situation, the Turnaround Team can be smaller. The Business Consultant and Turnaround Specialist can be one person, and it may not be necessary to replace the current CEO (or promote someone from within). The Accounting and Legal Firms are essential to a successful Turnaround Process. Depending on the scope and size of influence of the business, a Public Relations Firm is not always necessary. If the turnaround involves Liquidation, Sale Bankruptcy or Restructuring, then specialists are necessary to assist the Business Consultant in formulating and carrying out the Turnaround Strategy.
Resource: For more information on Business Leadership Qualities, please see my article on CEO Leadership Qualities.
Posted in Business TurnAround Strategies.
February 8, 2010 by Frank Goley, Business Consultant
As a business and turn around consultant with over twenty years experience working with numerous small and medium size companies, business turnaround services are some of the favorite work I perform. I enjoy the challenge and helping a troubled company to succeed again. Unfortunately, sometimes the business owner comes to me too late, and the turnaround strategy turns into a cutting losses strategy, often ending in bankruptcy, restructuring, liquidation or a forced fire sale (quick sale). The best advice I can give business owners is to hire an experienced business consultant immediately, no matter the stage of company growth, economic situation or company health situation. A business consultant can proactively help head off future disaster, help to grow the business and provide essential strategic direction. A good business consultant can help a business develop and implement an effective business plan so that turnaround services are never needed.
The important parts of turnaround strategy development and deployment are leadership, experience and expertise. The success of a turnaround plan rests with the people on the turnaround team and their ability and willingness to incorporate all of the company’s management team and key employees in the process. It is important to have a process structure which can achieve this. As a business consultant, I understand process, but I also understand the importance of experience and fresh ideas in a turnaround situation. It is the expertise of an experienced consultant who can adapt process to a particular situation in order to find unique, creative, successful solutions to a tough situation, using the strengths and experience of the turnaround team and the insights of company managers and employees, finally putting it all together in an agreed upon, synergistic, effective turnaround strategy, plan and program.
The most important thing a business consultant should do upon entering a turnaround situation is to listen, get to know everyone throughout the organization and give them opportunities and avenues to communicate with the consultant and the CEO. The CEO should be doing the same exact thing alongside the business consultant to instill trust, integrity and openness to the turn around process. If the CEO does not hold a position of high esteem with the employees throughout the organization, it is time for him or her to go and be replaced by either a CEO who specializes in turnaround situations or promote someone from within that has this relationship with the company’s people and can adjust quickly to being an effective CEO. With this trust and integrity established, it is time to get to work.
Steps I take as a turnaround consultant include: learn about the business; meet with advisors, creditors, customers and suppliers; evaluate the problems and issues; identify the most pressing and significant problems; identify opportunities; analysis; resource audit; risk assessment; develop the turnaround solutions and the resulting business strategy; acquire and leverage needed resources; deploy with confidence; and obtain and distribute value.
If you follow a similar process and have strong leadership qualities and skills, then, more often than not, the turnaround plan will be successful. However, it isn’t always so; sometimes it is too little, too late, depending on the activity and stage of the dire situation. If that is the case, a major re-structuring, quick sale, bankruptcy, liquidation or other end result will become the end game. While this can leave a hollow feeling among the turnaround team, you will find that if a good turnaround process was developed and implemented, yet failed, employees and customers will understand. They will adapt and move on and so should you. Holding on to what “could be” is toxic to any future career or new venture. While many may see this as failure and defeat, as a business consultant, I see this as a learning experience. Something which will not be revisited as owners and employees alike clearly understand, in the end, how they got there. The learning experience is invaluable and should be leveraged into many successes in the future. However, if you follow a good turnaround process, with an experienced turnaround team, the end result will very often lead to success and renewed future growth.
About Frank Goley, Business Success Consultant for ABC Business Consulting
This blog is written by Frank Goley, the ABC Business Consulting Chief Business Success Consultant, who has over 20 years experience helping companies start, grow, turn-around and succeed. Please visit The ABC Business Consulting Website for more information on what a Business Consultant can do for your Company.
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Posted in Business TurnAround Strategies.