Friday, May 31, 2013

Step-by-Step Solutions for a Company Turnaround

If you’re struggling like many businesses, you know the myriad of challenges exacerbated by the economy. However, despite the challenges, it is possible for businesses to successfully complete a financial turnaround.

First, you might have to put on a different set of glasses – see this economy as a marvelous opportunity.

But it’s not just a matter of increasing sales. There’s more to it.  Sometimes, I get inspiration from non-businesspeople like the most revered president in American history, Abraham Lincoln: “If I only had an hour to chop down a tree, I would spend the first 45 minutes sharpening my axe.”

To sharpen your axe, there are salient areas that need your focus in order to turn your business around, which include financial, marketing, and internal operations. For space limitations in this column, let’s deal with finances. Businesspeople are embarrassed by having to face the trauma of continuous collection calls. They often don’t communicate effectively with creditors on managing cash flow issues. So tell creditors you’re working to correct the situation.

The first objective is to manage cash flow in three steps:

Increase the cash balance. Collect the outstanding accounts receivable and generate cash from any saleable assets.

Prioritize the cash disbursements. Focus the available cash toward the must-pay expenses first, including payroll and associated payroll taxes, and pay other vendors with your remaining balance.

Develop a cash forecast. Project realistic cash receipts by customer (preferably include the products or product lines) and disbursements by creditor on a weekly basis for the three months – and monthly thereafter for a year. This means reducing the revenue and collections in your projection by 10 to 30 percent to make certain the actual results are achievable and you do not run out of cash. Develop and implement plans to operate and keep you in business at the lower projections.

6 key tips for an Operational Turnaround.

It concentrates on fixing the underlying business issues that got you into the mess in the first place, and this in turn increases profits.

Our 6 Key tips for an Operational Turnaround are,

Things get tough in Turnarounds, and achieving what can sometimes appear like the impossible can only be done when you’ve got some extra fire power and the benefit of a Company Doctor who’s been there before. Make sure that you buy in this experience and hire an experienced turnaround practitioner (read more here).

2. Lean

Getting more for less is the basic principle of Lean that is incorporated within its waste reduction techniques. Waste in any business translates directly into losses on the bottom line and so must be minimised. An Operational Turnaround therefore often utilises the basic principles of Lean.

3. Team work

Getting everybody on the same page and pulling in the same direction is essential and find out where this isn’t happening usually leads to a root cause of a problem (read more here).

4. Common sense

keeping things simple and focussing on the basics. If you keep it simple, then it’s easier to get everyone to understand it. Remember communication is key and getting your employees, bank and creditors to buy into your Turnaround plan involves keeping things simple.

5. Objective view

Sometimes the solution to a problem is right in front of you, but Directors and Managers often can’t see it as they are too focussed on day-to-day issues. An additional pair of eyes brings that objective view and gives the opportunity to ask the tough questions and revisit existing practices. Don’t hold back here, every stone must be turned over.

How to improve the efficiency of your small business

Business efficiency means making the most out of what you have; a fundamental discipline of running any company. As a small business owner, your key assets will include things like cash, employees, vehicles, premises, and access to products and services, but how often do you check to make sure they are delivering maximum efficiency for your business?

Outsource for efficiency

Outsourcing business functions such as HR and bookkeeping can create real cost-saving opportunities by freeing up a business owner's time that could be better spent on finding ways to improve the company's prospects.

Richard Contreas and Mark Findlay, founders of luxury floor company Harvey Maria, outsource almost all their business processes to operate with a team of just three full-time staff. Using an online portal to outsource their accounting, CRM, e-commerce, warehouse, and stock level processes has enabled them to focus on growing the business and boost turnover by 50% year on year.

Time to switch suppliers?

While it makes good business sense to have reliable incumbent suppliers, over time they will be looking to increase their prices for the products you buy from them, so they should be reviewed on a regular basis. You may find cheaper prices from fresh suppliers you haven't used before, while improved overseas trade could make an international supplier more viable and cost efficient today than previously.

Similar principles should be applied to business utilities, such as telecommunications and energy. Christian Nellemann, CEO of business services firm XLN Telecom, says: "Since the government did away with monopoly providers in favour of central regulation, a number of smaller suppliers have emerged to offer exactly the same products but at a lower cost."

5 Bootstrap Ways to Fund Your Startup

Whether your million-dollar idea is selling granola or software, you likely share a common fear with new business owners across the world: money. It’s not easy to cover bills and expenses as you build your startup to success. And startups are rarely profitable from the get-go.

But plenty of entrepreneurs have found creative ways to self-fund their businesses. Try one of these methods to bootstrap your own startup without going broke and follow in the footsteps of other successful entrepreneurs:

1. Consult in the same field as your startup

Aside from providing cash flow to cover your expenses, consulting is an opportunity to make connections and establish credibility in the same industry as your startup. Use your expertise as a consultant to network, build your client base and gain authority. All will be beneficial to building out your startup once you’re ready to launch.

For example, look at Mike McDerment, founder of invoicing software FreshBooks. He worked as a full-time consultant as he built his software company on the side. Once FreshBooks became cash flow positive, McDermett was able to leave consulting behind and focus on building the company full-time.

2. Work a part-time gig

Perhaps consulting isn’t your thing, but you still need work just to keep the lights on. Your side job and your startup don’t necessarily have to be related. Prioritize working on your startup during your most productive hours, then take a part-time job on the side to make money. Whether it’s tutoring or doing hourly manual labor, all sorts of jobs can give you the cushion you need to build your business during “non-working” hours.

Jason Ross, founder of JackThreads (sold to Thrillist) did exactly that. He worked as a bartender at night while building his online e-commerce business during the day.

Business Turnaround – 10 Steps To Success

Small and mid-size companies can make such dramatic business turnarounds changes. These businesses can have a difficult time getting a line of credit from a bank, typically don’t have meaningful assets to sell to increase the company’s cash position, and can’t afford to lay off large numbers of people.

Business Turnaround – Step 1: Write business, sales/marketing, and operation plans

Rarely do companies who write and maintain plans on an annual basis get into trouble. Plans chronicle the good and bad of the past and set a vision for the future. Investors, management, and employees all need to know what the company’s future plans are so they can avoid the need for a business turnaround. They need to see where they fit in, how they can help, and to share suggestions based on their expertise that will help the company succeed.

Business Turnaround – Step 2: Meet with key personnel and a board of directors or advisors

You must get the key people in the business together to have a no-holds-barred discussion on how to fix the company through a business turnaround. Don’t go into the meeting without a plan of your own. People lose confidence in leaders who lack a plan and vision for their business turnaround. The key in this type of meeting is to be self-assured, open-minded, and flexible.

Business Turnaround – Step 3: Revise plans

After listening to key executives in the business, revise and ask key executives to review the plans a second time before presenting the business turnaround plan to the board of directors and employees.

Business Turnaround – Step 4: Meet with employees

Have a company meeting, admit that there are things wrong with the business, and discuss how management plans to fix it. Provide employees with a copy of the company business plan and ask for their input.

An Effective Business Turnaround Strategy

The important parts of business turnaround strategy development and deployment are leadership, experience and expertise.  The success of a turnaround plan rests with the people on the turnaround team and their ability and willingness to incorporate all of the company’s management team and key employees in the process.  It is important to have a process structure which can achieve this.  As   Business Planner, I understand process, but I also understand the importance of experience and fresh ideas in a turnaround situation.  It is the expertise of an experienced consultant who can adapt process to a specific situation in order to find unique, creative, successful solutions to a tough situation, using the strengths and experience of the turnaround team and the insights of company managers and employees, finally putting it all collectively in an agreed upon, synergistic, effective turnaround strategy, plan and program.

The most important matter a business consultant should do upon entering a turnaround situation is to listen, get to know everyone end-to-end the organization and give them opportunities and avenues to communicate with the consultant and the CEO.  The CEO should be doing the same exact thing alongside the business consultant to ingrain trust, integrity and openness to the turn around process.  If the CEO does not hold a position of high esteem with the employees throughout the organization, it is time for him or her to go and be replaced by either a CEO who specializes in turnaround situations or push someone from within that has this relationship with the company’s people and can adjust quickly to being an effective CEO.  With this trust and integrity established, it is time to get to work.

An experienced business consultant and turnaround consultant can offer a variety of skill sets and services to help with the business turnaround. These include: Investment Overview 

Good Employees Make Mistakes. Great Leaders Allow Them To.

As a business leader, I found that one of the scariest things to do was to give your people the freedom to make mistakes. While mistakes allow individuals to learn and grow, they can also be very costly to any company. Scared as I was, I knew that truly great leaders found ways to allow their people to take these risks, and I genuinely wanted to be a great leader. I wanted to help my employees to grow. So I set out to discover how to accomplish this without placing my company in jeopardy.

“Courage is not the absence of fear, but rather the judgment that something else is more important than fear.”  - Meg Cabot

I quickly discovered that the first step was to determine the areas of the business where a mistake could take place without causing too much damage. I took careful attention to make sure that any areas where we would damage our clients and the trust they had placed in us were off limits for significant risk without serious executive involvement and oversight. I identified other areas where I could feel more comfortable allowing people the freedom to experiment on new and better ways of doing things.

The second step was to communicate to the employees that we were setting an official company policy:  Making any mistake once was OK, so long as it was an honest mistake made while attempting to do what they felt was the right thing. Making any mistake once was OK, but repeating that same mistake a second time was NOT OK. The hard, fast rule was that if you made any mistake for the first time the entire team would have your back in fixing that mistake if anything went wrong.

Four Tips to Ease Workplace Communication

Throughout my career, I have come across colleagues and higher ups that I had a great rapport with, but others were downright scary to approach. The reality is, you can’t break up with your co-workers (although you may want to); you need to make these relationships work. Here are some principles and techniques that helped me talk to the scariest of my former Wall Street brethren. I hope they help you too.

You can’t change your co-workers; you can only change your response to them
The bottom line is you can’t fix or change your co-workers, but you can alter your response to them. If you are really calm on the inside, your crazy co-worker on the outside will bother you less. Find a way to get relaxed, (meditate, do yoga), sit back and watch the insanity, and try not to get wrapped up in it. Easier said than done, I know, but over time, with practice, like anything else, it will get easier.

Clear the fear: Meditate

You need to leave early, or take a gym break during crunch time, or get some clarification about a task: completely legitimate things to ask your superiors about–but I see a lot of fear especially with younger folks (I was there once too) around approaching upper management on these matters. Next time you feel such jitters, try this meditation from the Energy Healing Institute: imagine lighting up the fear in the form of little iron filings (Etch a sketch style) and sending it down a bamboo pole; you can do this while running, walking to the water cooler or a traditional seated mediation prior to your workday.

Get out of your head: Say something

Throughout my career, I would be up in my head over-analyzing the person I was afraid to approach and what they thought of me.