“It’s the beginning of the end!” That’s how most owners feel when their business goes into distress. But it doesn’t have to be that way. Working with a skilled turnaround professional who understands the big picture and who knows how to ask the right questions can mean the difference between going under and getting out from under. And it all starts with asking the most simple, but often most overlooked question: “What are you trying to achieve?” Because if you don’t have the endgame in mind, it’s nearly impossible for even the most experienced consultant to begin crafting a plan of action that will ultimately lead to a successful outcome.
A Gap Analysis is the first step in the process. It involves figuring out where the company currently is, in comparison with where the ownership wants the company to be. It’s about beginning at the end, and helping the client clearly articulate reasonable goals and outcomes. Next, the experienced turnaround professional puts all the goals into measurable terms and creates a step-by-step plan to “bridge the gap,” thereby stabilizing the company and even bringing it back to profitability.
This articulation of objectives informs the entire revitalization process and helps to determine if the target is being neared and achieved. It almost always begins with a stabilization plan, a critical phase that must be attacked with great vigor and speed no matter what the intended outcome. This usually involves working to steady the business, improve cash flow and profitability, communicate clearly with all stakeholders that a stabilization is occurring and help the ownership work toward reaching their endgame, which may include:
- Keeping the business and improving profitability – Working with current lenders to help alleviate the strain of weekly payroll and even help find new lenders.
- Passing the business on to a next generation – Working with clients’ businesses that are multi-generational. Often an objective is to actively engage the next generation in the day-to-day operations while improving the profitability of the business.
- Selling the Business – Working toward increasing the value of the business to prepare for recapitalization of its debt or sale.
While the goals of each client may be different it’s important that they be articulated up front so an individualized strategy can be crafted. In the end, a successful turnaround is all in how you begin. At New Growth Advisors, we know that wondering around aimlessly with no end in sight is the surest path to failure. We always start by helping our clients to first choose their destination, then we call upon our expertise to plug in the coordinates to get them there safely and successfully!