As we move into the post-pandemic world, are you coming out weaker or stronger?
Regardless of the answer, the series will cover how to fix or improve the business in a proven process. The steps are simple. Being reflective about the company’s strengths and weaknesses requires the owner to be honest with themself.
During a Turnaround, Leadership & Management Looks Different:
- Leadership is about PULLING people and the organization toward something better;
- Management is about PUSHING people and the organization to new levels of performance.
This requires a vision of what it looks like when you get there and the ‘burning platform’ on why staying where we are will not work.
This starts with you, the Owner. Hiring someone to do this differs from doing it yourself because the outsider has no attachment, nor are they guilty of anything. They didn’t create the mess and, therefore, are open to all options. That is not the case for DIY. You did it and your mindset needs to own it. Also, most business owners at this point in their company’s history are suffering depression. You must move beyond feelings of guilt and embarrassment. If you are not positive about the turnaround and throw all your energy behind it – bring in an outsider, otherwise you are chasing bad money with good.
Now that your head is in the right place, start with building a foundation that should have been in place since the founding. The following are the 4 Principles we always build before fixing anything.
- Everyone has clear expectations for their behavior and results, and clarity on how it will be measured. This not only brings discipline to the business, it separates the outstanding employees from the rest. People who perform don’t mind being held accountable.
- Feedback on Results. You need to force conversations between the people in charge and those doing the work. Not only does this make accountability real, it saves a lot of wasted effort and time. Feedback is nothing more than discussing performance that is outside of expectations to bring it back on track.
- Peer Support. I could put team building here, but it is more than that. It is about building a collaborative environment where employees help each other master current assignments and develop other skills. Supervisors and managers play a role, but it must start with the employees taking care of each other.
- Planning is Owner Job 1. The long term success of anything is based on a plan to get there otherwise how do you organize and allocate resources? The owner must start thinking like an executive and remove themselves from the day-to-day business. This freedom is used for researching new market opportunities and building a plan to make it happen.
Short Term Focus
View this as triage. What is the current situation? Where are you hemorrhaging money, customers, employees, etc? What is the root cause of the bleeding? Then fix it! We always start with finding the money lying around – inventory gathering dust, accounts receivable not collected, missed accounts payable discounts, and lines of credit, etc. Our experience is the first time you aggressively go after these issues will add 10-20% more cash. We use those dollars to help fund cost reductions in production, marketing, sales, and people.
Long Term Focus
Once we have righted the ship and it is making a profit, the focus shifts to our journey and the first port of call. The near future includes scalability – when growth starts, what is getting in the way and how much money will we need. Part of the money issue is the source of funding – are we going to pay for this out of sales or look for capital investments? Beyond the near future, it is looking at the external environment for threats and opportunities. What is coming down the road we should prepare for before it arrives?
We started with operating principles and we close with what happens when those 4 are assembled together – Managing By Objectives. It is how we transform business goals and objectives into everyday behaviors. If the business is running on a MBO System, the foundation for the turnaround is built and you transform an under-performing / zombie company into a market leader.
Next: Putting the 4 Principles to Work
William Eastman is a result focused Entrepreneur, Consultant, Advisor, and Thought Leader with over 40 years in the business. That includes training, consulting, and management experience working with leaders in manufacturing, pharmaceuticals, software, hospitality, higher education, and online services. His areas of expertise include leadership, team building, coaching & mentoring, organizational design & change, business development, HR solutions, strategic planning, global strategy, startups, and M&A. His weekly radio show, Real Help Wanted: Building an All-In Workforce, airs on BizTalkRadio on Monday 7pm ET and Saturday at 1pm ET.