A Quick Management Solution to address Short Term
In these economically challenging times there are more and more businesses that find themselves in difficult situations where sales fall, customer base melts and costs rise.
Estimates so far indicate the virus could trim global economic growth by 3.0% to 6.0% in 2020, with a partial recovery in 2021, assuming there is not a second wave of infections, according to congregational research service
The worst scenario occurs, when the creditors keep knocking on the doors. Before the company thinks in terms of throwing in the towel to wind up in business, it is good to consider a TURNAROUND.
Whenever you see a successful business, someone once made a courageous decision, says Peter F Drucker.
This turnaround will tell us, if we are straying or continuing in the first place, and secondly it will help us to seize other opportunities, rebound and consolidate.
1 . ANALYSE: An honest analysis of where you stand
The turnaround must take a thorough look at all aspects of the business and come up with a simple, honest and realistic appraisal of the enterprise and its chances of survival and future success.
This initial review should look at all aspects of the operation including: sales, finance, administration, staffing levels and overhead costs, markets, customer base etc.
2 . IDENTIFY: In what form can the business survive?
Often a company, which has been in existence over a period of time, tends to support all units, even though some may generate a few sales or at a vast level stand at a liability counter.
Situations do change even in crisis moments. challenges do bring some opportunities. companies have to identify right spots to address short term.
A Google Survey conducted in May has revealed that 8 out of 10 car shoppers would now consider buying a vehicle online, rising from 7 out of 10 since before the coronavirus outbreak began.
While 37% of Indian and 31% of Chinese consumers said they had delayed buying a luxury product and likely to prioritise luxury purchases once their regions return to normal life, data from GlobalWebIndex indicates.
In a turnaround phase, it is highly critical that the management is able to identify based on the analysis made on what the business it can afford or continue based on new opportunities arising out of situation, and will point to areas where cuts can be made and efficiencies introduced to create a more sustainable company.
3 . STRATEGISE: A clear strategy for the short term future
A fundamental analysis of the causes of the problems will reveal where the company has gone wrong in the past and a new strategy should avoid previous mistakes and follow a new direction that is clear and robust in a competitive world.
This should include the current crisis (like covid-19) at hand. Thus the need is to define a strategy and and set the goals for action
4. PLAN: A credible financial plan for turnaround
This can be very short and simple and must show how the business verticals will be run and how and when debts will be paid but it needs the buy in of the key creditors.
If creditors, the bank and staff are going to support a business they must see a clear and achievable plan for future success.
5. IMPLEMENT: Via A PLAN OF ACTION –Speed is the key
A failing company is losing money and the longer it goes on, the more it will owe to creditors and maybe the bank — By acting quickly you will stem the losses and build up reserves.
Thus it is highly critical to identify the important areas of business, quickly work a plan of action around it and create an early win.
HIGHLY IMPORTANT TO STAY POSITIVE
Despite tough times, it is crucial that everyone (mainly the leadership) involved in a business during turnaround is positive and believes in the future. Everyone who works in the company must buy-in to the future plan and success.
Often staff and at times the senior management are wedded to “the way we used to do things around here” and they become negative about the turn around . It is highly imperative that everyone on the team works to the same goal and thus makes success a new opportunity.
Elias Moses is a Senior Business Strategist, Consultant, Researcher, Corporate and Leadership Trainer, Orator, Columnist and an Entrepreneur. He is also the Founder and Managing Director of a growing reality firm in south India. He is also the founder of Managing Next, an Online portal for knowledge share and Management Consulting.
The author can be contacted@
email: elias@managingnext.in, linkedin: www.linkedin.com/in/eliasmoses