Planning a Sustainable Turnaround

Alan Ball

Description

This concise and practical guide provides insight into business turnarounds. Walking through the process, this book provides practical advice around finance and how to deal with creditors and banks; accepting that the business is in trouble; identifying the reason why the business requires turnaround; the plan to recovery; the importance of people in delivering a successful turnaround, and the communication required to ensure success. Written as a practical guide, the book is written in plain English and draws upon decades of experience from the author as well as utilising several of the proven business models for evaluation and road map to recovery.

Sujets

• Gestion et management

Informations

• Publié par: Brown Dog Books
• Date de parution: 17 mars 2021
• Nombre de lectures: 0
• EAN13: 9781839522796
• Langue: English

Extrait

First published 2021
Copyright © Alan Ball 2021
The right of Alan Ball to be identified as the author of this work has been asserted in accordance with the Copyright, Designs & Patents Act 1988.
All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, electrostatic, magnetic tape, mechanical, photocopying, recording or otherwise, without the written permission of the copyright holder.
Published under licence by Brown Dog Books and The Self-Publishing Partnership, 7 Green Park Station, Bath BA1 1JB
www.selfpublishingpartnership.co.uk

ISBN printed book: 978-1-83952-278-9 ISBN e-book: 978-1-83952-279-6
Cover design by Kevin Rylands Internal design by Andrew Easton
Printed and bound in the UK
This book is printed on FSC certified paper
CONTENTS
Preface
Chapter 1: Start with the ‘Why’
Chapter 2: Stabilise the Finances
Chapter 3: Plan to Win
Chapter 4: Communicate, Communicate, Communicate
Chapter 5: Divided Diversity
Chapter 6: Implement at Pace
Chapter 7: Manage Change through Implementation
Chapter 8: Continuous Improvement
Chapter 9: Frequently Asked Questions
Author Biographyuthor Biography
PREFACE
Business consultants and leaders will often tell you that the most important thing in a business turnaround is either the strategy or the implementation. Now, while a strategy and implementation are important – without them, how can you follow and measure a path to success? – most important are the people in your business, and understanding where they stand and what you need to do to get everyone on the same page.
Having led, and turned around, several businesses, I now support other businesses in achieving growth and turning around their fortunes despite the barriers formed by people.
What I learnt over 30 years of leadership is that it is the way you manage the people that gets you results. Yes, you need a strategy. Yes, you need customers and suppliers and a team. But when you face the need to turn a business around, nothing is achieved that is sustainable without the people being onside.
The aim of this book is to navigate you through the turnaround process, but more importantly, it will guide you through the understanding of people, and how you deal with them through your turnaround journey.
At the end of it all, you will need to implement the findings and the guidance of this book. It is a proven theory, and while it might be uncomfortable for some, I am confident that applying it rigorously will increase the chances of success in the long term.
CHAPTER 1
START WITH THE ‘WHY’
There might be a hundred reasons why a business feels the need to turnaround, to transform, to accelerate growth. The reasons come from events, and we need to break these down into their lowest common denominators to fully understand the position we are in.
Stakeholders or shareholders may be unhappy with results, MDs and CEOs may see a decline and want to return the business to better days, or it could be that banks or lenders are concerned about performance and cashflow.
Recognition and acknowledgement of a problem may require the CEO to admit, at a minimum, that mistakes have been made, and at worst, that there has been a failure. This creates significant psychological barriers that need to be overcome. Four common psychological stages of a turnaround are:
• denial
• projection
• reluctant recognition
• aggressive action.
In the denial phase, the CEO refuses to recognise that a problem exists. He or she is confident that this is a period of temporary challenges and that the company should not deviate from its current strategy. With this psychological mindset, a CEO can remain in his or her management comfort zone. This phase can last anywhere from several days to several months, depending on the level of external pressure brought by independent third parties (bankers, accountants, vendors, etc.).
In the projection phase, the CEO grudgingly admits that there is a problem but refuses to search for the root cause. Instead, he or she projects accountability for the problem to sources external to the business (bankers, vendors, customers, new regulations, economic swings, etc.). This phase allows the CEO to continue to avoid responsibility and to hang on to or remain in his or her management comfort zone. This phase can also last anywhere from several days to several months, again depending on how much external pressure is brought to bear.
Eventually, the CEO must admit that there is a problem and recognise that they must act before the business reaches the point where it cannot be saved. This is the phase of reluctant recognition. In this phase, the leader is willing to listen to advice from the management team and outside advisors.
The fourth psychological stage, aggressive action, is when leadership begins the turnaround process by either beginning the search for the root-cause problem(s) and developing root-cause corrective action or engaging professional turnaround management to start this process. The amount of time that it takes to get to this point is directly related to the speed and success of the turnaround.
If the leader is unable to recognise that there is a problem with his or her business and is unwilling or unable to take aggressive action, the company will continue to deteriorate. This will make the turnaround process more difficult and could result in substantial damage to the value of the business that may ultimately result in catastrophic failure.
Don’t get sucked into comparing yesteryear’s turnaround businesses and today’s, trying to justify why it’s different today than it used to be. It’s not. Regardless of size and sector, there are businesses going through the same challenges today as they were 25, 50, 100 years ago. Sure, the dynamics might be different, but fundamentally, if you get it wrong, it’s the same result – failure.
There is a quote from Tolstoy in his novel Anna Karenina : ‘All happy families are alike; each unhappy family is unhappy in its own way.’
The same is true in business: a healthy business carries the same traits as every other healthy business; an unhealthy business is unhealthy in its own way.
This is the reason the ‘Why’ is so important. It has to be your ‘Why’. You need to unearth it, own it, deal with it.
One of my more recent turnarounds is a good example to illustrate the ‘Why’.
Tradelink is an Australian plumbing and heating distributor. It has been in existence for over 150 years and has more than 200 locations across Australia. Being owned by a New Zealand Plc meant profitability was key, but results had for two years been on the decline and sales were falling fast.
The business leaders at the time had invested millions in a new strategy that focused on showrooms and trade branches, so there was a self-fulfilling prophecy that failure was not an option.
Stores had been refurbished, lighting was made up of copper tube, and trade counters were a work of art made of angled wood to take the business into a more retail experience.
Blindsided by the wow factor of the new design, management continued to pursue the makeover of stores across the country. Sales began to fall, profitability was at risk and staff were leaving to join competitors, in particular a new competitor that was opening large stores fast.
On my arrival in Brisbane, the business was haemorrhaging money and was relying on the sale of a large asset in Sydney to save the financial year from complete disaster. The first thing we did was focus on the ‘Why’: gaining insights from staff, from customers and from leavers allowed us to build a picture as to why the business was failing.
When you compile a list of possible ‘Whys’, it’s important not to blame everything on the Why, and placing anything and everything into the bucket. There is one main ‘Why’; the rest are ‘because of Why’.
The Tradelink list we compiled after extensive research and interviews consisted of the following:
- losing sales ‘because of Why’
- losing staff ‘because of Why’
- costs rising ‘because of Why’
- new competitor growing aggressively ‘because of Why’
- plumbers are tradesmen, not retailers ‘Why’.
All the outcomes of the retail strategy were because of that strategy. The tradesmen didn’t like the new wooden counters – several told us you couldn’t sit a standard A4 folder on it. They felt uncomfortable walking into the pristine 21st-century retail look of the displays – several felt conscious of their dusty boots.
Staff didn’t like the new look. With their customers leaving, and the new competitor on the block opening new stores and behaving like a trade business, staff joined and took their customers with them.
We will come back to the turnaround and what we did later. The important thing here is to acknowledge the ‘Why’. It was unique to Tradelink; nuances and behaviours in the pattern that emerged were Tradelink’s to own, to accept and to deal with.
Can you see now why the ‘Why’ is important? If you look at the list above, the business could have tried to address all of these elements, but the turnaround would have failed.
If you are losing sales, often the sales director or marketing director will try to convince you to reduce prices or have a sale. Following that advice in this specific turnaround would only dilute margin and likely not increase sales to compensate.
The steady loss of staff is a blow to any business. Relationships are key in most businesses, and staff moving to a competitor is a double whammy that can be costly. But again, in this specific turnaround, it’s not the ‘Why’ the business was failing: it was an effect of the ‘Why’.
When deciding on their ‘Why’, businesses need to have fully investigated all avenues of reasons. Deciding that a turnaround is required is the first step in acknowledging that the business has a problem likely to have a detrimental effect