Ten Steps to Tune Up Your Business
June 22nd, 2009 |
The actions needed when turning a business around depends widely on the severity of the problem, the nature and size of the business, and the time period available.
The recovery process includes two steps. First, is to control cost, manage employee morale, customer confidence, and vendor relationship. The second step is a more deliberate one. For a more sustainable success, one will need to change or adjust the business model and the organizational structure . The second step doesn’t have to wait for the first one to end.
This article deals with the first step. A link to the second step is provided at the end of this text.
1. Focus on the most profitable products and services. This may mean that other products or services may have to be put on hold or discarded, at least on an interim basis.
2. Fire your least profitable or problem customers. They will drain your precious resources, and doom any restructuring plan to failure
3. Define the roles and responsibilities needed for the turn around plan. This often requires flattening the organization. For example, if you have a team lead, a manager, a director, and Sr. director, a VP, a Sr. VP, and an executive VP for a given area, you need to determine who is needed to execute and deliver, regardless of the title or current role. The rest need to go. It makes sense to release the highly compensated employees, unless they have a direct and immediate impact on the turn around.
4. Make all your personnel cuts only once. Nothing kills morale more than protracted cuts. This will generate fear, doubt and uncertainty. Good workers will leave before the mediocre ones, and the uncertainty will kill any enthusiasm for being on board with the turn around plan
5. Become fanatical about cost control and cash flow. Trim all fat. There are many ways to reduce operational cost, raging from renegotiating contracts with suppliers to using technology to reduce travel, to deferring projects and purchases
6. The best time to innovate is when things are tough and the chips are down. It is a big mistake to give up on re-inventing yourself. You will not success in turning your business around if you don’t adjust to change
7. Increase your marketing and sales effort. The down time is where you must intensify your effort to increase revenue. Involve as many resources as possible in marketing and sales. After all, revenue and profit is what 99% of businesses need to turn things around
8. Communicate with your customers. Be open; admit that your company is having difficulties, and that you have developed a fix, and is working on turning things around. Ask your key customers for support and feedback. Most customers will take interest in helping you.
9. Reach out to your vendors. Ask for their support and share key element of your turn around plan with them.
10. Of course all this must be preceded by specific plan of action (your turn around plan). This plan must be developed and supported by all your key players.
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