Business Turnaround Ideas To Save A Failing Business

If you’re reading this post, then the chances are you’ve Googled something like, ‘business turnaround ideas’ or ‘quick business turnaround ideas’. If so, then you’ve come to the right place. Business Fixer is a business turnaround blog chocked full of business turnaround ideas and resources. In this post, I’m going to give you some quick-fire business turnaround ideas that all revolve around one of the core elements of any business – Finance. Sound good? Let’s dive right in!

The Business Triangle

So why have I picked Finance? Well, anyone who has read this blog will know I always talk about the Business Triangle. You see, every business has 3 core components:

• Finance
• Operations
• Sales & Marketing

It doesn’t matter what type of business you have, every single business has these 3 foundational parts to it. Now some other businesses may have other things like Procurement, Research and Development and other ‘fancy departments’ but these don’t exist in every single business. A cake shop typically doesn’t have an R&D department (unless you’re Willy Wonka).

Because these 3 areas are the foundational core of any business, we must get these right first. If we get the foundation right, then we have a bigger chance of a business turnaround. 

In my experience, most business turnaround issues come from these areas. Usually, it’s all 3, but in my experience, the number one problem area lies in Finance. This is such an important area because, without the numbers, the business is doomed to fail.

Business Turnaround Ideas For Finance

For this post, I’m going to assume you know the finances of your business and have an understanding of the 3 financial statements. If you don’t then don’t worry! You can click the links below that will go into each area in more detail

• Profit and Loss Statement 101
• Cash Flow Statement 101
• Balance Sheet 101

In any business turnaround, you have 3 options:

1. Increase turnover
2. Decrease expenses
3. Do both

The quickest business turnaround ideas lie in the area of decreasing expenses. So in this post, I’m going to focus on that.

Reducing Human Capital

Typically in business, the highest expense you have is wages. This is a very polarising and controversial topic because there is so much emotion attached to it. But in a previous post, How To Fire People Without Feeling Guilty, I talk about doing what is necessary. That’s your job – to do what’s necessary. However, I do advocate you read that post as I give you tactics to fire the right people and be able to sleep easier at night. If you’ve fired someone for the right reasons then you can sleep easier. 

By reducing your human capital costs, you will positively affect the Profit and Loss statement and the Cash Flow statement. On the Profit and Loss, human capital will usually fall under the Operating Expenses section. On the Cash Flow, it will fall under the Expenses section. Which leads me nicely to the next section…

Cut Expenses That Are No Longer Required

When was the last time you looked at your Expenses section on the cash flow? If you review your Expenses in detail I almost guarantee you that you’ll be shocked at what you see. One of the simplest business turnaround ideas you can implement is to review your expenses and either cut or reduce expenses.

You’d be surprised how many things you’re paying for that you simply don’t need anymore. Businesses grow and change, and quite often Direct Debits are left uncancelled. You’d also be shocked to learn how many times I’ve done this exercise and we were paying a lot of money for things that we didn’t even know what they were!

Negotiate Expenses on Things That Are Required

If you can’t get rid of an expense, who says you can’t negotiate a better rate? People often shy away from negotiation because they are afraid or they think it can’t be done. Nonsense! It can be done because I have personally done this time and time again. My teams and I have successfully negotiated reductions in:

• Rent
• Rates
• Insurances
• Software licenses
• Long term debt
• Postage
• Stationery

The list goes on and on. You’d be surprised what you can reduce your expenses to if you just ask. Like my mum always said, “If you don’t ask, you don’t get.” Listen to mother, she’s always right.

Obtain Payment Plans for Unexpected Large Expenses

Shit happens; it really does. Your staff make mistakes, things go wrong and general oversights happen daily. However, as we all know, these mistakes and oversights can sometimes be very expensive. We don’t forecast for mistakes (it would be cool if we could). But every business will have big payments to make at some point or another. When this happens to you, I would always advocate trying to get the cost spread out on a payment plan. Let’s say one of your staff makes a mistake that costs you £10,000. That’s £10K that you’ve not factored in your forecast. Maybe you were just about scraping a surplus, but now this £10K unexpected cost is going to cause you a deficit. Quick business turnaround ideas are to try and negotiate the cost down (if you can) and to spread the cost out over a payment plan.

Remember that the cash flow is all about how well you move cash in and out of the business. If your surplus is at risk then you need to move things onto a payment plan and ease the pressure.

Increase Gross Profit

On the Profit and Loss, the first type of profit you’ll see is the Gross Profit. Now, this is important, because the following will come out of your gross profit:

• Operating Expenses
• Tax
• Interest

Once all these have been paid you’re left with your net profit. So because gross profit is the first type of profit, we must make as much as possible in this area. In this post, I go through in detail on how to increase gross profit. But in simple terms we must first look at how gross profit is calculated:

Turnover - Cost of Sale = Gross Profit

So we calculate the gross profit by taking the turnover and subtracting the cost of sale. That means that 2 things affect gross profit:

• Turnover
• Cost of sales

If you want to increase your gross profit then we must:

• Increase turnover
• Decrease cost of sale

If you want to increase turnover then you have to do a deep dive into your Sales Function. I go into this in a lot more detail in this post.

To decrease the cost of sale means you will have to negotiate better prices for everything that relates to making your sale – raw materials, ingredients, online expenses, packaging etc. You may have to be open-minded to changing your suppliers. If the goal is to decrease the cost of sale then you have to do what’s necessary to achieve it.

Final Thoughts

I hope you’ve enjoyed these quick business turnaround ideas. I wanted to focus on Finance because as I said before, it is the most important area and usually the place where you can make the quickest impact. Business turnaround is all about long-term sustainability and that comes from changing the financial statements to reflect your financial picture – and being able to sustain those numbers for at least 6-9 months. Check this post out for more on the definition of business turnaround. Good luck!