Saving a Business in Trouble –
Business Turnaround Strategy and Leadership
As a Business Consultant with over 20 years experience working with a variety of small and medium size companies, Business Turnaround Services are some of the favorite and most rewarding work I perform. As a Business Turnaround Consultant, I enjoy the challenge and helping a troubled Company to succeed again. Unfortunately, sometimes the Business Owner/ CEO 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 a company growth, economic situation or company health situation. A Business Consultant can proactively help head off future disaster, grow the business and provide essential Strategic direction and consulting. Lastly, a Business Consultant can help a business develop and implement an effective Business Plan so that turnaround services are never needed (again).
This whitepaper on Business Turnaround Strategies and Leadership focuses in on what I have learned over the years as a turnaround expert, business owner and entrepreneur. An effective business turnaround starts with good Leadership. Without it a turnaround is not going to be successful. Then and only then, can business turnaround strategies and processes be successful.
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Business Turnaround Leadership
Ok, I will get off my “Consulting Soapbox” and get into strategies a business owner can employ to turn a business situation around. Before getting into specific business turnaround strategies and processes, it is important to identify certain Leadership traits and characteristics that a successful turnaround professional/ specialist/ leader espouses and employs. Whether you are a Business Consultant, Turnaround Specialist or the Company CEO, these leadership traits and characteristics are important to have in order to successfully guide a company to a rebound.
Business Turnaround 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.
- Determined & Self- Disciplined
- Inspires the Troops
- Makes Timely, Decisive Decisions
- Has Clear, Concrete, Simple Vision
- Excellent Communication Skills
- Street Smart
- Charisma: Inspires Employees to follow
- Highly Intelligent, yet has Common Sense
- Not Guided by Ego
- Performance Accountability
- Quickly Learns & Adapts
- Open to New Ideas
- Understands Personal & Professional Weaknesses
- Excellent Listener
- Actions Implemented with Clarity, Consistency and Commitment
- Utilizes Different Leadership Approaches & Roles as Needed
- Tough, yet Exceedingly Fair
- Humbled by Business Learning Experiences
- Never forgets who He or She is s a Person
Business Turnaround Team
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 elements. The Turnaround Team can consist of:
- Business Consultant
- Turnaround Specialist
- Interim CEO/ Turnaround CEO
- Accounting Firm
- Legal Firm
- 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 and an explanation of Leadership Qualities, please see our Article on CEO Leadership Qualities.
Turnaround Leadership Tips
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. These tips can be applied to the Company CEO, Turnaround Specialist, Business Consultant and/ or the Interim/ Turnaround/ RE-Structuring CEO. Extensive experience in the Turnaround Team is essential, but it must be linked with excellent leadership. Having just explained the essential qualities, characteristics and traits of a good Leader in the previous section, we will examine Leadership skills and roles to employ in order to successfully execute a Turnaround Strategy.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- Most Important / Best Advice: 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.
This article is an excerpt of a Chapter from our Business Success Guide. For the rest of the Chapter, please visit: The Business Success Guide.
The remaining major sections of the book’s Chapter have been left below as an outline so you can get an idea of what else is contained in this Chapter of the Business Success Guide.
Business Turnaround Process, Strategy and Implementation
The most important parts of a Turnaround Strategic Development and Deployment are leadership (which we discussed in detail), experience and …
About the Turnaround Process
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 …
Step by Step Business Turnaround Process
Step One – Learn About the Business…
Step Two – Meet with Advisors, Creditors, Customers and Suppliers…
Step Three – Evaluate the Problems and Issues…
Step Four – Identify the Most Pressing and Significant Problems…
Step Five – Identify Opportunities…
Step Six – Analysis…
Step Seven – Resource Audit…
Step Eight – Risk Assessment…
Step Nine – Develop the Turnaround Solutions and the Resulting Business Strategy…
Step Ten – Acquire and Leverage Needed Resources…
Step Eleven – Deploy and Don’t Look Back…
Step Twelve – Obtaining and Distributing Value…
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 …
My Parting Advice
Three things I want to leave with you…
Business Consultant’s Importance:
The Turnaround Team Runs the Show:
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.