If you’re reading this post and have Googled something along the lines of ‘business turnaround checklist’ then you’ve come to the right place. Business Fixer is a business turnaround blog dedicated to providing in-depth content to help you turn around your business. Corporate turnaround is a demanding task and has many moving parts. I find that a checklist is a great tool to help me frame my thinking and ensure that I have covered all bases in a structured manner. In this post, I’m going to take you through my personal business turnaround checklist and walk you through each item. Sound good? Let’s dive right in!
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Business Turnaround Checklist
Here’s my business turnaround checklist. I have created this in Todoist, one of my favourite productivity apps (and yes, I am always rocking Dark Mode). As you can see, my checklist is broken down into 3 main sections:
- Financial Goals
- Business Triangle
The 3 sections are in order and must be followed for the success of your turnaround management. Let’s look into each section in more detail.
Business Turnaround Checklist 1 – Financial Goals
The 1st section of the business turnaround checklist is to understand the financial health of your business. Anyone who has read this blog knows that my first starting point is the numbers. If you don’t know your numbers, you don’t know your business. One of the biggest mistakes I see in a corporate turnaround is that people will firstly attack the areas of Sales, Marketing or Operations. Although well-intentioned, this is, unfortunately, an ineffective approach and displays a lack of commerciality.
Business turnaround requires real commerciality, and that comes from understanding the numbers.
I often use this analogy. Imagine you go to see your doctor. Before you’ven even sat down or even said anything, they begin writing you a prescription. Wouldn’t that be weird? Why?
They haven’t asked you anything. They haven’t looked at your medical records or medical history. They haven’t understood what problem you have. How can they, therefore, prescribe you a suitable medication to fix the problem?
We do the same thing in business. We randomly prescribe things and hope that something will stick. This is reckless (as would a GP who acted in this manner). No. In a business turnaround, we must first identify the issues.
Looking at each financial statement is like looking at a company’s medical records. They tell you exactly what the issues are and therefore the type of fixes you need to prescribe.
Financial Forensic Analysis
You’ll notice I use the phrase, ‘Forensic Analysis’. The beauty of the numbers is that they don’t lie. If you speak to your Operations or Sales guys, they will feed you all kinds of reasons and excuses as to why things aren’t working. They can lie. They can hide things. If you study each financial statement forensically i.e. in detail you will pick up all kinds of things. The statements tell you stories, you just have to know where to look.
Paint A New Financial Picture
Once you have understood the financial picture, it’s time to paint a new one. Ask yourself key questions like:
- What do we want our average monthly gross profit to be?
- What EBITDA do we want to see per month/quarter/year?
- How much surplus do we want every month to be comfortable?
- How quickly do we want our customers to pay?
- When do we want to pay our loans off?
- What do we want the Shareholder Equity to be in 3 years?
By asking good questions like these, you’ll be able to paint a new financial picture that will turn your business around.
Business Turnaround Checklist 2 – Business Triangle
The 2nd section of the business turnaround checklist is The Business Triangle. In a previous post, I go into this in a lot more detail.
Every single business can be boiled down to 3 core areas:
- Sales & Marketing
Most of the time, the issues lie in these 3 areas. If you can get these areas right, the rest usually falls into place.
I always advocate using the goal-setting formula found in the brilliant book, ‘The 4 Disciplines of Execution’ by Franklin Covey. For each area, you will set goals using this formula.
Move [X] to [Y] by [WHEN]
Financial Goal Examples
- Increase gross margin from 45% to 62% by 30th September 2020
- Decrease Operating Expenses from £50,000 to £35,000 by 31st October 2020
- Reduce average payment time from 45 days to 30 days by 15th August 2020
- Decrease Current Liabilities from £100,000 to £75,000 by 30th November 2020
Operations Goal Examples
- Decrease time to manufacture widgets from 2 hours to 1 hour by 17th September 2020
- Decrease human capital from 50 people to 35 people by 25th November 2020
- Increase daily output from 200 widgets to 400 widgets by 31st December 2020
Sales & Marketing Goal Examples
- Increase customers from 30 to 50 by 31st August 2020
- Increase monthly Sales from £30,000 to £50,000 by 30th September 2020
- Decrease average monthly printing costs from £2,000 to £500 by 30th November 2020
- Increase monthly website traffic from 500 hits to 1,000 hits by 31st December 2020
- Decrease cost per lead from £10 to £7 by 31st August 2020
For a more in-depth look at how to set these kinds of goals, check out this post.
Business Turnaround Checklist 3 – Execution
The 3rd and final section of the business turnaround checklist is Execution. As per ‘The 4 Disciplines of Execution’ by Franklin Covey, most businesses do not have a problem when it comes to setting a business turnaround strategy or plan. They have a problem with executing the plan. Executional capability is the number 1 thing that will make or break your turnaround. You could have the best plan in the world, however, if you don’t execute it, then it’s worthless.
I love the advice given in ‘Extreme Ownership’ by Jocko Willink and Leif Babin about obtaining buy-in for your plan. DO NOT JUST EMAIL THE PLAN OUT! Don’t hide behind email. Business turnaround requires leadership, and I mean, real leadership. Once you’ve drafted the plan, the weakest thing you could do as a leader is to email it out. Your job as a leader is to gather your troops and roll it out in person. I always say it’s best to roll out a plan in person.
The real reason you need to roll it out is to get your team’s buy-in. If you simply email it out then you will find it extremely difficult to get their buy-in. Rolling out the plan in person gives you a chance to go into the ‘why’. Explaining the ‘why’ behind each point is one of the best ways to get buy-in. It shows your team that you have spent a lot of time, thought and effort into creating this plan – rather than randomly throwing together a few ideas and hoping it will work.
Secondly, rolling out a plan in person allows your team to ask you questions. Q&A’s are a powerful tool. It allows people to air concerns, questions or provide feedback. Real leaders expose themselves to direct lines of questioning. Real leaders listen. Real leaders answer questions directly. Do not hide behind email.
Diarise Key Meetings
Now you have a plan and a team bought in. Now it’s time to touch base with your team regularly to get progress updates on the plan. Naturally, people stray from the plan. It’s your job to keep them on the path and make sure everyone is working towards the same goals.
I advocate scrums instead of meetings. Typically meetings are long and boring. Scrums come from lean/agile methodology and are a great way to save time and get movement in 10-minute bursts. Check out the Scrum Master Toolbox Podcast for more great tips on how to run effective scrums.
I also suggest you do weekly reviews with your team (I usually do mine on a Friday afternoon). The weekly review’s purpose is to:
- Review what happened this week
- What did we miss?
- What are the priorities for next week
This simple structure keeps your guys organised and on track. Check out ‘Getting Things Done’ by David Allen on how to do effective weekly reviews.
One of the main reasons why projects fail is communication breakdown. You must set up a comms plan that suits your business needs. In this post, I go into detail about how to set up a comms plan and I also recommend some communication tools and apps to help you.
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There you have it! My personal business turnaround checklist. I hope you find this useful. I really recommend you check out the links to previous posts as it will give you a deeper understanding of why this approach is important and more importantly – why it will work!