At one time or another most businesses go through financially difficult periods, and the truth is there’s no one single reason why. Different kinds of companies in different kinds of industries with different kinds of leaders will all experience different challenges to their bottom lines.
While there may not be any one single reason companies struggle, over the years I have developed a five-step formula that has proven successful for turning around a variety of faltering businesses across a variety of industries.
- Have an open mind
Be sure to approach the company with an open mind. When you are first introduced to a business that is experiencing challenges almost every founder, manager, and employee will share their opinions on why it’s in decline and furthermore they will purport to also have the solutions. It may be valuable to listen to a few of these opinions but you must remember that these opinions are most often limited in scope and shared through the lens of job or ego preservation. Analyze the facts and draw your own conclusions.
- Protect the Assets
Focus on a company’s most important asset: its people. A company’s employees will not only show you how a company is run and introduce you to its resources, but they will also open a window into its past (especially employees with significant tenure). Most importantly, they will give you a sense of what the culture is—not what the executive team or the mission statement says it is, but what it actually is. This knowledge of where the company has been and how it runs will help you create a plan to go forward. Once you have that plan, the success of the recovery will largely depend on the performance of these assets.
- Move with Haste
Do not be afraid to act quickly. As you are analyzing a business and developing your strategy to save it you will instinctively know the difference between a change that strategically needs to wait and a change that needed to happen yesterday.
I once took over a company that had a diversified product offering but had built its business primarily on one particular “flagship” product. When competitors began taking market share, the company grew afraid to raise the price of this product even though eventually it wound up selling it for 12% less than it cost to manufacture. That had to change and it had to change immediately.
- Be Transparent
During the entire turnaround process you will need to be transparent at all times. You will also need to ensure the management staff is as well. This does not mean you relay worst-case scenarios, but you should be realistic about the potential pitfalls, time frame of a reorganization, and the upside when the strategy has worked. If you aren’t transparent or somehow obfuscate, employees will quickly pick up on the mixed messages and perceive it as manipulation and dishonesty. You also run the risk of having key employees jump ship when you need them the most.
- Share the Vision
Finally, once you have quickly and expertly analyzed the internal and external challenges to the business, executed some short-term strategies to stem the bleeding, and then finalized the mid- to long-term strategies, it is time to share the vision and deftly execute upon it. At this stage it is important to ensure the entire team understands and buys in. Be sure to document any new policies and procedures in case there are any questions later or employees are tempted to revert back to their earlier methods they find easier or more comfortable.
While the problems companies face vary greatly, I have found that applying these five steps always put a company on a better path and better position it to handle whatever comes its way.
This article originally appeared on Fast Company.
This article was syndicated from Business 2 Community: 5 Steps to Turning Around a Faltering Business
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