TURNAROUND BALANCE FOR SUCCESS
by Gavin King CA
A business, when deciding to commit to working on a Turnaround, may not always be in the most desperate position and in actual fact, this is the best time to look at a Turnaround. The Business may wish to enter a turnaround plan when doing well so that it can take advantage of other opportunities that may exist, or in the modern parlance, they would seek to pivot. Although, when looking at what areas of the business that aren’t doing well and need to be turned around, there needs to be a balance as you do not want to impact those that are doing well. Questions that should be asked are: –
- How can we make this Turnaround work?
- Is this Turnaround worth the time?
- How do we measure the effects?
- What outcomes are we expecting?
Actions that Companies do in a Turnaround are numerous and can be very simple. This includes things like unloading or loading times of products, arrangement of products or position of products in storage and etc. Turnaround is not limited to the Business’ financial position, it can be how things are done at an operational level. The balance is between the success that the Business has experienced and how the Company can be more successful.
In more challenging times, a Business has to balance the timing of the Turnaround activities with the need to have continued cashflow. The Business should develop a number of Turnaround strategies to meet its needs within the current financial constraints and then select the strategy that the Business believes will result in a sustained growth over the next period.
A Business, when going through a Turnaround, must consider how it’s going to be measured. The Business has to consider the goals of the Turnaround and what benchmarks it is going to use for success and failure of a Turnaround. This must be decided prior to the Turnaround taking effect. The outcomes of a Turnaround must be reasonable from the current position of the Business. This can be the hardest point to consider as to when a Turnaround has failed in meeting its overall objectives.