Why Turnaround Strategy is Important
Why You Need a Turnaround Strategy
Canadian cities and provinces are beginning to reopen, but numerous businesses remain dubious and unprepared. The coronavirus impact has taken the wind out of many commercial enterprises. The questions many business owners want to have answered include:
Are we equipped to stay in business?
How will we keep our doors open?
How can we stave off future situations as severe as the pandemic?
Can we rebuild our businesses' resilience through agility, preparedness, and connectivity?
What will Canada's new standard be?
BMCO, Inc. understands what is going on in the world today, and, as frightening as it may be, we have ideas and tools to get your business back, albeit on a different track, in most cases.
4 Ways to Identify If Your Business is in Distress
The signs to look for if your business, like most businesses around the world, is in trouble include:
1. Litigation — When vendors and creditors are displeased and audits become a nightmare, external pressure can become unbearable.
2. Ignoring Critical Information — Some business owners and managers choose to ignore what is occurring right in front of them. Naturally, this exacerbates the company's already growing problems.
3. Quality Issues Concerning Products and Services — The disruption of quality issues indicates poor management and upcoming sales loss.
4. Fearful and Unmotivated Employees — The attitude of lower-level management and employees is a sound indicator of how things are going with a business. Sometimes this group of workers catches on to the Distress in the company before the C-Suite does.
How to Manage a Successful Turnaround
The American Bankruptcy Institute offers that there are three simple requirements for making a business turnaround:
There must first be a core business having a service or product that customers want.
This entity should also have the right people to turn the business around.
The company should also have adequate financing to survive during the time it will take to develop and institute the business turnaround.
If these requirements are not in place or cannot be put in place quickly, it will probably not be a successful turnaround.
It is not surprising that the environment in a business that has hit hard times is chaotic and confusing. Employees are leaving the organization or are frustrated beyond their limits. The manager in charge of the turnaround is the person who needs to bring order, accountability, and focused actions to the organization.
Now is the time to make the organization comfortable with the idea that there will always be a constant and dynamic change in the business world. A process must still be in place to evaluate and improve as necessary.
Corporate Turnaround Facts
It is not unusual for businesses worldwide to experience a downturn due to unexpected high expenses or lower than anticipated profits. This situation is fixable. In other cases, this may lead to more troubling concerns. If this occurs, management must find ways to make sure the company can rise and come back to life.
Some Common Causes for a Corporate Enterprise to Fail
Often the causes are external, such as:
Economic conditions respond to the status of the market or a decline in the economy.
A new, aggressive competitor can wreak havoc with your business.
If market demand shifts and there is a reduction in product preference, a company may take a hefty punch.
When prices in the supply chain increase, corporations can begin spiraling downward.
When new business regulations are providing a lower cost of production materials, profits may increase.
Internal causes can include:
Lack of awareness concerning new trends
Management failures
Financial decision mistakes
More attention must occur to processes, management, spending, and other internal factors that create the decline.
Turnaround Communication Protocol
When the time comes for engaging an executive consultant, stakeholders, management, owners, clients, and power become significantly interested in what is going on and how it will affect them. Everyone is concerned about:
Confidentiality
Costs
Transparency
Initial findings
Risks
Debt payment
Other challenges
Turnaround consultants need to establish an orderly process that provides information to all players with proper interpretations of those who will need to know them. Consultants must set up a formal communication protocol established in all turnaround situations. A communication protocol consists of:
The commencement of the engagement
A weekly turnaround consultant report
The inclusion of the 13-week cash flow forecast in the report
A weekly review report with management
A weekly review with stakeholders (management, owner, and senior lenders)
A modified weekly report to other stakeholders (customers, employees, key suppliers, unions, and government bodies)
Conference calls when required
Finalizing and adopting the turnaround plan through a review meeting
Seven Strategies to Revive a Business
Re-evaluate (Situational)
Re-define (Strategic)
Re-employ (People)
Re-innovate (Product)
Re-brand (Marketing)
Re-finance (Money)
Re-work (Execution)
The M&M Food Market Turnaround Story
M&M has 317 traditional stores and over 1,300 express stores across Canada. The express stores, and a mini-version of the conventional stores, are located in Rexall pharmacies and 7-11 stores. M&M opened a few traditional M&M stores in the past year, but the emphasis was the express format that created 800 express stores.
The M&M company has, from the beginning, diligently implemented its health and safety measures. M&M has been in business for 40 years, so they know a thing or two about retail and food. Andy O'Brien had this to say about M&M:
"What came with that because we were able to supply, because we had a very safe environment, because of all the previous changes we made to making sure we could do online, same-day ordering because we completely transformed the portfolio because we've renovated over half our network, our sales went through the roof, and they still are."
Our price guarantees, online ordering system, renovations, improved frontline training, and more made us serve our customers well when the pandemic hit.
Does your business need help?
We offer customized solutions for your business. We believe in the No Sweat Intro so no matter what the problem, we always offer a complimentary assessment and evaluation.