Saturday, June 1, 2013

Five steps for a successful business turnaround

I have taken part in many business turnarounds in my career, and time and again noticed the same problems, regardless of whether the reason for the turnaround was a relatively minor situation or a reorganization after bankruptcy. Here are the five steps that need to happen during any major business adjustment and some of the pitfalls to avoid along the way. While this article will focus on sales teams, these steps are of a universal nature and will apply to most departments within a company.

1. Assessing the Situation

Before a successful business turnaround can be implemented, it is crucial to understand what got the company where it is now. When businesses fail, it is most often due to ineffective management. Since management is usually the problem, it is difficult to use current management insight to determine what change is needed. As outside consultants, we often hear from ineffective management teams that they need greater funding to correct the sagging business, but we know that throwing money at a problem does not work. The people who created the problem in the first place will not know how to fix it. Providing them greater resources is a mistake: it wastes money and degrades employee morale. Also, failing businesses most often do not have good metrics in use to manage and guide the business. Metrics should not only tell company leaders where they have been but should also be used to gauge future performance. Management should be able to clearly describe how the metrics it uses will predict future results.

Providing that the company’s products or services are competitive, the issues affecting the performance of a sales team can range from an ineffective sales process to low morale, which is caused by any number of factors.