published Nov 26, 2023
Running a business requires incredible strength, tact, and skill. Even with all these elements in place, data from the Bureau of Labor Statistics show that at least 20% of businesses fail in the first two years of operation, and another 45% fail within the first five years.
A significant cause of this failure is a lack of proper fund management, which can, in turn, translate to bankruptcy and eventual collapse. The miracle of a corporate turnaround can redirect the course of the business and allow it to thrive again.
Unfortunately, many business executives do not know how to turn a business around and end up running it into the ground. Whether you’re at the helm of a struggling enterprise or looking to fortify your business against future challenges, this article is your roadmap to a successful corporate turnaround. Let’s dive in!
The ultimate goal of everyone undertaking a turnaround in business is to steer the establishment's operations toward profit. Unfortunately, only about 30% of corporate turnarounds are successful.
Many attempts have failed because of the inability to engage and follow through with a proper business turnaround strategy. To successfully execute a corporate turnaround, one must do the following:
1. Understand the Situation
The first step in undertaking any successful project is proper analysis. This will provide insight into the challenges you are facing and help you take appropriate action for the best results. If you desire a business turnaround, you must evaluate your financial and general operations to identify loopholes.
You can also adopt the SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis system to assess your strengths, weaknesses, opportunities, and threats. Doing this will help you see the current market trends and create a plan to help you adjust to these trends.
About 22% of the respondents in a study said they carried out research/diagnostics at the beginning of their turnaround process, and 60% had a successful turnaround. Thus, we can safely conclude that it's nearly impossible to formulate an effective strategy for recovery without first understanding the situation at hand.
2. Set Goals and Objectives
After successfully identifying the issues affecting your company’s performance, the next step is to create actionable goals. These goals and objectives should not just be mere hopes and wishful thinking; they should be realistic. Adopt the SMART goal philosophy to ensure your goals are Specific, Measurable, Attainable, Relevant, and Time-Bound.
In many organizations today, only about 16% of employees have a proper understanding of the priorities and goals of their companies. Others simply do their routine work without a clear-cut idea of the general vision of the organization.
There’s nothing more fulfilling than working with people who have a deep understanding and alignment with your business strategy. When misalignment exists, there will be constant mistakes and confusion, and every attempt at a corporate turnaround will be futile. So, establish short-term and long-term objectives to be addressed by the turnaround strategy.
3. Develop a Comprehensive Plan
Now that you have clearly defined your SMART goals, you need a plan to see them become reality. Work with your team to create a detailed plan outlining all the steps necessary to achieve your desired outcomes.
You can even take a cue from other successful corporate turnaround examples to mirror their strategies where possible. The goal is to ensure that all hands are on deck and actively working to see the business turnaround become a reality.
In developing a plan, ensure you cover every detail. From deadlines to the person responsible for each task and even the method of execution, include every detail in your plan. This will help you identify any issues quickly.
One thing that can hinder the execution of this plan is a lack of proper communication. 90% of the respondents in a study by Harvard Business Review believe that their top managers do not communicate company strategy frequently, leading to unfavorable outcomes for the company.
Beyond developing a plan, endeavor to carry your employees along with you every step of the way. Clearly outline the scope of their duties and ensure that they internalize them before they start anything.
4. Reduce Costs
The truth is that growth has a significant role in refining your needs and preferences over time. As time goes by, you’ll discover that many things no longer make sense to you or your brand, such as unnecessary expenditures, and you’ll have to put them aside.
To successfully implement a turnaround business strategy, you must learn to reduce costs. Take time to go through your company's finances, and you’ll marvel at some of the unnecessary expenses that you have been committing to. An auditor can help you identify wasteful spending habits and opportunities to reduce operating costs while maintaining quality standards.
5. Strengthen Leadership
You cannot talk about a business turnaround strategy without attempting to strengthen your leadership. Unfortunately, a report by Zippia shows that only 5% of businesses have implemented training at various levels of leadership.
For a successful corporate turnaround, you need to invest in leadership training. Implement team-building exercises among your staff to foster a sense of unity and alignment. You can also encourage regular feedback from them to identify their pain points and offer solutions.
You may want to take things a step further by altering the structure of your leadership or even stepping back from the helm of affairs just to see that everything is in order. By investing in leadership development, you can significantly improve your chances of success during challenging times.
6. Improve Employee Morale
No matter how you try to look at it, your employees are a very vital part of your organization. They are like foot soldiers that go all-out to ensure your goals and dreams become a reality. Without employees, your business will cease to operate.
Seeing how important they are to your operations, it's crucial to make them comfortable in their working environment. Unfortunately, many executives only focus on giving orders and commands without considering the well-being of their staff.
To get better output from your staff, start by improving their morale and recognizing their efforts on the job. 60% of the employees in a survey say they would work harder if management recognized their efforts.
You can also provide flexible work hours so that no one is overworked. Introduce shifts and hybrid working conditions to ease the burden of work. Ensure there are breaks in between work hours and that no one works during that time. Celebrate their small wins and motivate them to perform better. Investing in your employees’ well-being will lead to better performance and increased productivity for the organization.
7. Utilize Technology
In our world today, there are endless possibilities thanks to rapid technological advancement. You don’t have to schedule physical meetings constantly; a simple Google Meet link can connect everyone in one place!
According to Oracle, firms that used technology in their operations in 2020 increased their revenue by 58%. Such an increase can be the turning point for your business and the essential ingredient for a successful corporate turnaround.
Leverage technology to streamline your processes, increase efficiency, and improve communication among your team. Besides helping you save time, utilizing technology will help you be more effective and act quickly.
With team apps like Asana, Slack, Trello, and others, you can assign tasks, hold meetings, and track performance. It’s the ultimate productivity hack at your fingertips. With the right tools, you can revitalize your company finances and experience steady growth.
8. Evaluate Your Progress
At this point, your corporate turnaround voyage should be in full swing. There’s a tendency to relax since you have set up an “effective” turnaround strategy. Unfortunately, stepping away now without proper monitoring is a costly mistake.
Always track progress against your goals regularly to ensure you are achieving your desired results. If you are not getting the intended results, you must return to the drawing board and see how you can improve on the already existing strategy.
To help your employees further, you can hold training on corporate restructuring. You may even go as far as inviting an expert to emphasize the importance and process of revitalizing a struggling company to restore its profitability and competitiveness in the market. Sometimes, you only need a hand to guide you and help accelerate your business to a new level.
Turn the Ship Around and Move Forward Confidently
One person can change your life, and one meeting can improve the course of your business; all it takes is proper positioning and alignment with the right purpose. Your business needs someone who can relate to your struggles, listen to your challenges, and provide actionable solutions.
When you think of a corporate turnaround, think of a reliable business consultant with the experience and attitude to right the ship; think Foreword Companies. With our approach that covers the planning, process, and implementation of solutions, we offer endless value to our clients.
Schedule a call today to be part of our community and learn more about how we make businesses better.