What Is Business Turnaround?

Business turnaround is, to many entrepreneurs and small business owners, a taboo phrase. It suggests failure and, worse, the kind of approach that involves nothing more than slashing jobs and liquidating assets. The good news is that, in fact, most business turnaround operations are nothing of the sort.

Business turnaround doesn’t submit itself easily to definition, as it encompasses a whole range of possible situations and responses. At its simplest, however, it is possible to think of a successful turnaround as any intervention into a business which is experiencing problems, and which both stabilises the situation and leads to the business achieving sustainable growth in profits.

It is vital to understand that business turnaround does not only happen when a venture is in crisis. These are, of course, the most dramatic of turnarounds, but they also represent the stage at which turnarounds experience the highest rate of failure. Many less heralded turnarounds occur many months or even years before a moment of crisis. Wise business owners recognise that when they have reached a point of stagnation in profits or growth, a turnaround may be needed. Similarly, even those businesses which appear highly successful may require a rethink and turnaround in either their financial model, their management style, or both. The only thing which unifies these different kinds of turnarounds is that all of the businesses are, without intervention, heading towards eventual failure.

Whilst many businesses employ expert consultants to conduct turnarounds, or even bring in new management with experience of such projects, this is not necessary in every situation. You will require some objective advice, but you don’t have to pay through the nose for it. Many small businesses have conducted successful turnarounds simply by asking their friends and family to try purchasing the product or accessing the service in question, and then to give their honest feedback.

Armed with such feedback, you will then need to take an honest look at each section of your business. What are the reasons for the difficulties you are encountering? Do you have cashflow problems, insufficient or inadequate infrastructure, or does the issue lie with either the staff or the management of the company? Whatever your conclusion, make sure that you come to an absolutely clear understanding of what the problems are. This must include an honest appraisal of your competition. Are you currently being outperformed by other businesses in your area, and if so, why?

Once you’ve identified your problem, work out exactly what it is you are going to need to fix it. Don’t be half-hearted. There is simply no point in attempting a business turnaround using inadequate measures and resources. Unless you want to be stuck with your problem for the foreseeable future, you need to take this opportunity to fix it. Plan out exactly what kind of resources you will need to put your business back on the path towards long-term, sustainable growth in profits, and then set out to secure them. You can turn things around.

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