As Business Turnaround consultants we would be typically brought into a company to devise and execute a plan of corporate renewal, assuming that the firm has enough potential to make it worth saving. This is always a challenging aspect of a business that is hard to see internally but we bring in the objectivity to help.
Before a viable turnaround strategy can be formulated, the root causes of the crisis must be identified.
Frequently encountered causes of business failure include:
• Revenue downturn caused by weak sales channels
• Inaccurate sales projections resulting in poor strategic choices
• Poor execution of a strategy
• High operating costs
• Insufficient resources
• Weak R&D projects (new ideas)
• Strong competitors
• Excessive debt
• Inadequate financial controls
While each case is unique, the turnaround process frequently involves the following strategies that are presented to the stakeholders:
• Change of top management
• Reformulation of strategy = The Business Plan/Strategy Plan
• Increase sales – Revenue Growth Plan
• Cost reduction
• Operational alignment plan
• Emergency action plan
The results of a well-implemented turn around plan are that positive cash flow will be achieved and the longer term strategic plan implemented. The strategic plan will aid the management team to focus on achieving sustained profitability.