10 Steps to Business Recovery
Business Advice from First Recovery
1. Review and Assess. Be objective.
Review the situation as it is – look at the causes as to why your business needs help. The first thing we do at First Recovery involves a Restructuring Business Model to look at your management accounts, sales order book, banking financial arrangements, internal controls and your current customer service levels. At this point we consider the quality and leadership skills that your business has in its favour to move on to the next step.
2. Develop a Plan and Business Strategy
What can you do now to salvage your business and how much time have you got? Now is the time to revaluate your business plan – look at your business model – does it need to be tweaked? We take a serious look at Product/Market Reorientation – is it time to introduce a new product or marketing category as part of your Improved Marketing structure? Do you need to introduce new value added services that will make a difference to your customers and to your revenue? Are staff upskills worth looking at? Do your staff need to understand digital marketing for example?
Mergers/Strategic Alliances. Maybe now is the time to merge your business with another or create a strategic alliance to fill a skills gap? Either way it’s time to rewrite your business plan.The benefits of writing an updated business plan help you measure actual results. It will provide a relevant form of communication for investors, staff and the bank. It will show clearly what your future business plans are. It will also indicate to third parties that your proposed business turnaround plan has been carefully evaluated and is a viable proposition that should be supported.
3. Management
For the business turnaround to gain momentum you will need the support of your staff.
Explain, clearly, the current business model and show clearly what the consequences could be if action is not taken now. Seek feedback from your management team and involve them as much as possible in the turnaround. It is vital that you elicit the concerns of this group, address them as positively as possible and move forward as one team to bring about results. They need to be committed to the future plans if your business is to reinvent itself for success.
4. Communicate with all other Employees
It will be necessary at the earliest opportunity to meet with all employees or their union representatives, particularly if job losses are planned. A prolonged period of uncertainty, fuelled by gossip and rumour will destroy what business you have left. Communicating the bad news as well as the good news in a timely manner is essential. Use the opportunity to provide your entire staff with an insight into your future business plans.
5. Meet the Bank. Talk to your bank or investors about your plans to turn around your business.
Ideally meet them face to face if possible to seek assurances and support for the business.
6. Meet Customers
Depending on the severity of the situation within the business it may be necessary to reassure key customers of the business turnaround plans and the benefits that will accrue for them. This is the time to Review Informal Schemes of Arrangement too. To free up cash flow and to generate better credit terms consider contracting your customers into two year contracts to benefit from longer credit terms and to reduce overheads. This action should be considered mandatory if the cause of the business demise has been poor customer service, poor quality product or any other matter not meeting the expected/agreed customer satisfaction levels. Begging for a second, third or even fourth chance to ‘get things right’ may be embarrassing but remember: no customers – no business. Learn from past mistakes, do not promise what cannot be delivered and ensure internal systems, processes and communication channels are raised to a standard that will seamlessly allow business to be conducted in a timely and efficient manner.
7. Meet Suppliers
If your business has not been able to settle payable accounts on time, even the hint of business turnaround activity may result in suppliers imposing draconian payment terms that are likely to jeopardize the business turnaround recovery plan. If support for the turnaround plan has been gained from the financial institutions and investors, aim to seek meetings with suppliers in order to seek their continued support and to re-establish trust.
8. Cash is King
Review your cash reserves and look carefully at your credit management procedures. Pick up the phone and talk to your creditors – tell them the position and negotiate extended payment terms. Next consider Asset and Cost Reduction . Look at unused assets in the business and release if necessary. Be creative. Look at unused buildings, consider renting out spare office space, selling unused plant and office equipment, disposing of excess or redundant stocks, factor sales debt and if unavoidable make excess employees redundant. Remember its your business and its your job to save it. Keep all unnecessary overhead costs down.
9. Implement New Systems and Procedures
Look at existing systems to ensure that they will meet the goals of the business turnaround plan. Make whatever changes are needed and you can be assured that old practices that may have worked two years ago will almost certainly result in the same old results. Positive and profitable change may be required and this should be communicated to employees, so that they understand their roles in the new business environment.
10. Monitor, Measure and Take Action
Results should be regularly measured against plan and corrective actions taken if required. Key performance indicators (KPI) should be determined that will give a snapshot of the business performance and be available on a daily, weekly or monthly basis.
