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24th March 2017
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Soapbox: Tips to turn around struggling businesses
by Adrian Kirby
Adrian Kirby is one of the UK's leading entrepreneurs with a passion for property, the environment and investment. In recent years he has thrown his hat into the private equity sector and he boasts a proven track record in helping struggling businesses turn around their fortunes - investing both his time and investor capital into various ventures.
"After what seems like an age of stark recessional gloom, and with economic recovery now being set into motion, many UK businesses are beginning to look to the future. Those who have struggled through the hardest times are now getting back on their feet, some being bought out of administration, others once again looking to build upon their business after years of anxious caution.
But what can you do for a business to ensure a true turnaround in fortune?
For me, there are several things a business owner needs to do right away, before any kind of turnaround can be made possible. Here are my top tips to revitalise a business.
Understand your strengths and weaknesses:
Firstly, the initial priority is to really understand the state of your business as it sits today. I would then seek to interpret your business's strengths and weaknesses into what the imperatives are for both the short and long term. Once you understand the areas in which your organisation needs to improve, it will be much easier to ascertain the day-to-day measures that must be put in place, in order to actualise these changes.
The biggest challenge is often getting the right management in place, so that the rest almost takes care of itself. You can focus on getting the right sales strategy and the right distribution strategy, but fundamentally it comes down to getting the right people doing the right things.
Write a business plan:
The benefits of writing up a detailed and feasible business plan are huge; it will provide a reference, against which actual results can be measured and evaluated. It will also provide an indication to third parties that the proposed plan of action has been carefully evaluated and is a viable proposition that should be supported.
Throughout the business turnaround process, results should be regularly measured against your plan, and if necessary corrective actions should be taken. Key performance indicators (KPIs) should be determined that will give an idea of the business performance and should be analysed on a weekly or monthly basis. The KPIs should reflect the important aspects of the business outlined in your plan, which will determine success or failure.
Communicate with managers, employees and financiers:
Never be afraid to admit and confront your commercial mistakes and also be prepared to communicate your plans with investors, staff and relevant stakeholders.
When talking to staff it is important to gauge the concerns of the group and address them as positively and directly as possible. The current business situation should be explained and the consequences of not making these changes should be emphasised. These employees will be critical to the success of the turnaround, as they will be performing the planned action and delivering the results.
Always ensure that stakeholders are told the truth of your position... neither financing institutions or investors forgive unpleasant surprises and it is essential to maintain credibility.
The bank and any other party with a financial investment in the business should be advised of the change in plans. If possible meetings should be arranged to discuss the plans and to seek promises of continued support. If you are in debt, contact creditors and organize a payment plan. Remember, when faced with a mountain of bills always pay your employee's salaries first.
These points are the first steps you should take in turning your business around. Provided sound management principles are employed, results are measured and positive trends are reported, good control of your business should be regained. However, it must be considered that when it comes to business, there is no such thing as a 'quick fix'. You might be able to dress your business up in the short term, but in reality if you're going to truly turn a business' fortunes around it will most likely take at least 12 months, perhaps longer.
With this in mind, be prepared for a long road of hard work! The lessons learned during the turnaround process should be taken on board to avoid a repetition of previous mistakes. Aside from this, I would advise any potential reviver of a business to relentlessly focus on the day-to-day detail, in order to maintain control and deliver on your promises."
30th July 2010