As a turnaround advisor , when I first meet a potential client, I feel like they think I have a big magic wand, and I’ll be able to come in, wave my wand, create an instantaneous miracle that will cost them a small fortune and then disappear, leaving them with a lot of turmoil. However, this couldn’t be further from the reality of how the turnaround process works.
While every business is different, every business owner is different, and every industry is different, the key to the recovery of a sick company is the same – it relies on a robust plan.
Characteristics of a turnaround plan
A successful turnaround plan must have these characteristics:
- Address the fundamental problems
- Tackle the underlying causes and not the symptoms
- Be broad and deep enough in scope to address and resolve all the key issues
Plans must consider the big picture and not the individual problems in isolation. It is also important the plan does not get bogged down in too much detail. It is far better to act quickly rather than spending days working on a plan in detail.
Turnaround plan key ingredients
There are seven key ingredients to a successful turnaround plan:
- 1 Crisis stabilisation
- 2 Leadership
- 3 Stakeholder support
- 4 Strategic focus
- 5 Organisational change
- 6 Critical process improvement
- 7 Financial restructuring
With each of these ingredients, there are various strategies needed to make them work. Under crisis stabilisation, for example, there are strategies such as taking control of the business, cash management, asset reduction, short-term financing and first-step cost reduction.
In a business I worked with recently, I started the turnaround plan by taking control of the direction of the company, reviewed and put in place more accurate cash forecasting models, changed how and when they paid suppliers, and put a focus on customer cash collections. Simultaneously, I started addressing their short-term financing requirement by seeking more appropriate financing for the company, reviewing their operations and overheads, and determining what were core assets.
This may sound chaotic, it is actually very structured in my mind as the turnaround advisor and closely follows the plan and ingredients for a successful turnaround.
Timing in the turnaround process
To add to the structure, I have four overlapping phases in the timing in the turnaround process:
- 1 The analysis phase
- 2 The emergency phase
- 3 The strategic change phase
- 4 The growth and renewal phase
Each phase will incorporate multiple different ‘ingredients’ and turnaround strategies. For example, the analysis phase is not just a diagnostic review, but also brings in the crisis management and stakeholder support ingredients. It is the starting point for the development of the turnaround plan and may encompass turnaround strategies such as cash management, C-suite leadership review and financial control.
What makes a turnaround process successful?
A lot of business advisors have a specialty, and excel at that specialty be it marketing, accounting, organisational change, IT, etc. With turnarounds, the process to be successful needs to be:
- ● Comprehensive – it needs to be both tactical and strategic
- ● Non-linear – per the timing of the turnaround process, a successful turnaround requires simultaneous rather than linear sequencing
- ● Wide-ranging – they are broad in scope. For example, they may tackle both cost-reduction and revenue growth, soft and hard issues, and short- and long-term priorities.
At Byronvale Advisors we have perfected a polymathic consulting method, which means our teams of experts specialise in multiple disciplines and industries – instead of just a single area. We draw on their diverse, specialised knowledge and experience to create specific, thorough solutions for your business or organisation.
Our polymathic consulting approach accelerates the time to minimum viable knowledge on your organisation’s industry and business processes. We access and use specialist knowledge by effectively combining specialist capabilities with your business’ needs – meaning we assist you quicker and better.
Using this model, our turnaround process is comprehensive , non-linear, and wide-ranging with a focus on delivering a successful turnaround.