Troubled businesses often look doomed to either fail or get
bought up by successful competitors, but turnaround strategies can help a
business return to a more profitable and stable position. Implementing business
turnaround strategies requires making a number of painful decisions, but you
need to remain focused on the fact that the decisions represent a path to
rebuilding a viable business.The following are a few frequently utilized
methods of a business turnaround.
Downsize
Troubled businesses often keep employees on the payroll that
the business does not actually need or that no longer serve a function. Cutting
down on the number of employees you must pay every two weeks can create a major
cost savings. You can also consider pay cuts or reduced hours for all employees
as an alternative to straight layoffs. No matter what strategy you choose, you
will meet with resistance and, likely, anger from employees. Provide employees
a straightforward explanation of the financial situation and that the business
must cut back on staff and wages or close its doors.
Drop Deadbeat Customers
Many businesses must cope with customers that place big
orders, but ignore invoices. Make it a priority to collect on any outstanding
invoices from these customers to help shore up the business’s finances. Once
you collect on these past due accounts, advise the customers that they need to
find a new service or inventory provider. Dropping deadbeat customers lets you
devote precious resources to paying customers and new customer acquisition.
Drop Non-Critical Projects
Even small businesses tend to accumulate ongoing projects
that suck up employee time and capital. Conduct a review of all ongoing
projects and drop any projects that are not business-critical. Dropping
projects lets you devote that money and employee time to operations or critical
projects.
