But the truth is that many businesses go through periods of slow or reverse growth that tax the ability of the owner to keep going, draining resources, losing sales and losing employees. Can this business be turned around?
Some businesses I have seen are not salvageable. A business ground too far into the ground with debt, tax problems and aggressive competitors who smell blood in the water will not usually survive. And some companies are simply in a dying industry. The auto body shops must be keeping a very keen eye on Google self-driven cars which promise far fewer dents.
Having decided that a business can be saved, the turnaround expert next looks for root causes of decline or problems. Some the areas to be examined are:
- Have sales fallen?
- Have margins fallen?
- Have receivables become older?
- Have payables climbed?
- Have administration costs climbed?
- Has the business lost its way?
- Has the owner lost his/her way?
In practice, I have found that most of the answers lie within the head of the owner or manager. He/She just doesn’t recognise an irritant as a business killer until a 3rd party points it out and measures it. But my 149 point questionnaire shines a floodlight on all the dark areas.
After identifying a possible culprit, the next step is to measure. Simply put, we are trying to avoid spending time on low return fixes.
In northern British Columbia I worked on a truck repair company that was in trouble. Creditors were at the throats of the owners, the managers were discouraged. They had no inventory to generate repairs and revenues. They were out of cash. On day 1, we installed a system for collecting outstanding bills thereby pushing the bank account into the black. My review of their creditor issues revealed a large role played by one supplier to whom we returned boxes of “dead” inventory. With credit restored, we were able to buy enough repair parts to get the sales rolling again.
But my role did not end there. With the help of administrative staff, I developed 5 Key Performance Indicators for the owner to use on a daily basis. With these 5 fact based indicators, he knew in 5 minutes