1. Identify the Cause (Be Brutally Honest)
Identifying the cause of distress is an uncomfortable and confronting process for any business owner, because one of the primary reasons is often the owner’s own mistakes in management or strategic direction. But facing up to your mistakes and having a thorough understanding of the reasons why your business is in its current position is vital to the process of working through the issues, learning from them and preventing a recurrence.
2. Remember the Basics
Ask any business owner, and you’ll find that their story is neither one of unbridled success or abject failure. Even businesses that are facing the prospect of closure have usually experienced success in some aspect of their operations; this is particularly the case in struggling businesses with a long history, which were previously financially successful but currently are not.
3. Get External Help Early
Don’t make the mistake of trying to fix things yourself. Engaging with an experienced, objective advisor is critical to the turnaround process. I say this for three reasons; firstly, the right advisor will have gone through the same process with other businesses in the past. Business turnaround is a delicate balancing act, where quick decisions must be made but the wrong decision can tip you over the edge, and it is critical that you have someone on board who can find this balance. Secondly, having an outsider’s viewpoint is valuable; because business owners spend so much time in their business, they tend to become blinkered and set in their ways. An outsider will help to remove those blinkers and cause the business owner to see how things could be, not just how they are. Thirdly, business turnaround is stressful, and having someone there to talk to and provide support is extremely important.
4. Make Tough Decisions Quickly
You’re in trouble, so there’s no point in beating around the bush. Many business owners struggle to make bold strategic decisions such as cutting staff, closing offices or discontinuing unprofitable product lines when their business is in distress. Some feel making these decisions is an admission of failure, some get caught in the trap of feeling that action is not required because ‘change is just around the corner’, and some feel personal attachment or loyalty to particular staff, offices or products. These feelings are understandable, but they don’t help with dealing with the reality of the situation. As Henry Ford famously said, “if you always do what you’ve always done, you’ll always get what you’ve always got”.
5. Maintain Your Balance
The most common response from business owners who are facing disaster is to work longer and longer hours, pushing themselves to the point of exhaustion. Understandable? Yes. Helpful? Usually, no. In fact, overwork probably contributed to the situation in the first place, as overworked people are less productive and more prone to errors.