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About The Business Fixer Podcast
Hosted by Haroon Rashid, the Business Fixer Podcast is for any business owner who wants to know how to get from A to B in the simplest possible way. This business podcast is full of business tips including leadership, sales, marketing, finance, culture and much more. Does something need fixing in your business? Don’t know where to begin with your startup, grow or turn around your business? Whether you’re a startup, established business or a multimillion-pound business, the Business Fixer podcast will help you understand where you are, clearly define where you want to be and guide you on the road to get there.
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[SHOW NOTES] Business Turnaround Plan
[BOOK RECOMMENDATION] The 4 Disciplines of Execution – Franklin Covey
[BOOK RECOMMENDATION] Free To Focus – Michael Hyatt
[BOOK RECOMMENDATION] Extreme Ownership – Jocko Willink and Leif Babin
[TRANSCRIPTION] How To Create A Business Turnaround Plan
Hey sports fans and welcome to the Business Fixer podcast where we believe that clarity is king and simplicity is queen. I am your host Haroon Rashid. Today – episode six: The business turnaround plan – three simple steps of how to create a business turnaround plan. I’m really excited because this is the culmination of over 10 years experience that I have when I’ve gone and, uh, into businesses and turn them around. And it’s just the key lessons that I’ve learned that have worked every single time.
The Business Fixer podcast is sponsored by Dad Mode. Dad Mode is hilarious dad gifts at dad jokes t-shirts and dad mugs. Uh, some really good stuff on there. Uh, you can go and visit them on dadmode.co.uk where there are special offers on even though we’ve gone past father’s day, there’s still some great offers on there where you can still buy some gifts for him. dadmode.co.uk
So one of the key things that I get asked as a business turnaround experts is how do I create a business turnaround plan? And in all my years of working with businesses, I’ve come up with a three step process that works every single time and don’t get me wrong. Although it’s only three steps, there’s a hell of a lot of work behind each step.
But what I want to make sure is that if you are in a business turnaround situation and you’re listening to this podcast, then you will at least be able to go away and you’ll have some actionable stuff that you can do straight away to help turn things around. And don’t forget to go onto businessfixer.co.uk, where we will put all the links to this good stuff in the show notes.
So make sure you go and check out the web. Look at the show notes, look at the links and all the good resources that we have there, which will support today’s episode. So business turnaround plan, step number one is all around the numbers. So understanding the financial numbers, this has to be the starting point for any business in a turnaround situation.
If you don’t know your numbers, you don’t know your business. This is crucial. To turning things around. You’d be surprised how many times I’ve been in a business and ask them basic questions about the numbers. And they don’t know, well, how can you fix something if you don’t know where the issues are? So when I say you need to understand the numbers as always, if you read the blog, I’m always banging on about no.
Three financial statements and that’s the profit and loss statement or the P&L, the cashflow statement and the balance sheet. Again, if you go on the show notes, I will put links to all of these 101 guides that I’ve done for each of the financial statements. So you will know what you’re looking for and how to improve.
So, uh, but if you aren’t financially, um, astute, then don’t worry about it. I mean, look, profit and loss. Look, that is simple. How profitable are you or how profitable aren’t you, I guess is the thing cashflow statement of course is just telling you how well you move in cash through the business. How well are you collecting money and how are you paying money out?
What’s in the bank balance at the end of the day. The balance sheet tells you your net worth as a company, it’s saying, how many assets have you got? How many liabilities have you got? And then, you know, you take those away from each other and you’re left with a net position. That’s pretty, very, very oversimplified way of looking at it, but go and check out the show notes.
So once you understand the numbers, I, what profits do we have or not have. You know, what’s that gross profit. What’s the, uh, tax, uh, what’s the, uh, profit before tax and after tax, things like that, or the cashflow position or your shareholder value on the balance sheet, once you know that that’s your starting.
You know where you are. We’re in the beginning. Now, the next thing we need to do is to paint the new financial picture. So it doesn’t matter what it looks like right now on the numbers. It doesn’t matter. All you’re going to do is say. What does the great picture look like? What does the dream position look like?
And for each financial statement, y’all going to create a dream position. So on the P&L you’re going to say, what profit do we want to be looking at? What gross profit do we want to be looking at? What does our net profit needs to look like on the cashflow statement? You’ll be saying, well, what surplus do we want to see?
You might say. How quickly are we collecting money? So we might be collecting money from people on average, within 60 days, maybe you want to reduce that to 45 days or 30 days on the balance sheet. You might want to reduce your liability somehow. All of this is just your dream position. This is what you’re working towards.
It’s the goal. And you know, the next thing we need to do then of course, is to make that dream a reality. And how do you do that? You set goals. So the next section would be to set financial goals. Now you’ve dared to dream. It’s time to start making the dreams become a reality, but. A dream without goals are just dreams.
They don’t just magically happen. You have to make them happen. So I always advocate using a goal setting formula, uh, that comes from a book called the ‘Four Disciplines of Execution’ by the Franklin Covey Institute. And it’s a, it’s a fantastic book. Again, it’ll be in the show notes, go and get a copy of that book.
But in there they give you a fantastic goal setting formula, which goes like this. Move X to Y by when. So, uh, we’ve done another episode on this where we’ve covered this in a lot more detail, but again, you can get the book. I’ll go look at the blog, but let’s say our gross profit was currently at 20%. Now what the goal would look like would be, we’re going to increase gross profits from 20% to 35% by December, 2021.
Do you see how that works? We’re moving something to Y by when. That’s why you need to know the starting point. That’s what the X is in the formula. So you need to set goals with that formula for each of the financial statements. Now we’re on to the step number two, which is defining the few, most valuable goals now.
The biggest temptation in a business turnaround situation is to try and do everything at once. You can’t do that. And it sounds very counter-intuitive but the biggest thing that I ask people to do straight away is stop. Just stop. Stop everything we’re doing. Let’s just think, and again, it’s, counter-intuitive because there’s fires that need putting out things are going wrong, left right and centre. There’s urgent things all the time that are cropping up. But unless you stop and just think about what are the few highest value things I can tackle right now, you’re not going to get any further forward. Trust me. I’ve been there. Yeah. I always talk about something called the business triangle, which again will be in the show notes, but every business can be boiled down into three areas.
That’s finance, operations, sales, and marketing. Every single business can be boiled down to those three things. Those core elements, as long as you get those three things, right. You will be fine. Everything else just kind of seems to fall into place are in a business turnaround situation, one, two, or all three of those things are going to have issues.
I can guarantee that. What I would do is I would use something called the big three, which comes from a great book called ‘Free to Focus’ by Michael Hyatt. And in that it’s a way to prioritise your tasks. It’s basically saying you could do a hundred things, but what are the three most valuable things you could do, right.
That’s going to have the biggest impact. We’re not ignoring everything else. All we’re saying is let’s just prioritise these things. If we could just get these three things, right. What would they be and what impact would they have? So, as I said, there’s three core components, the finance, operations, sales, and marketing.
We need to identify the big three in each of those areas. So finance we’ve already talked about in step number one, you’re going to have some goals for each of the financial statements, operations. What are the three things that you need to do to get that thing in, in shape? What about sales and marketing?
What are the few high value things you can do to increase sales or better your marketing? And you know, it doesn’t have to be three. The point is that you’re chunking things down. It could be five things. It could be four, it could be. It doesn’t matter. As long as you find the high value thing, that’s going to turn things around and get it done.
So I would definitely use the big three. So now we move on to step number three in the business turnaround. Execution. We’ve got to get it done. So just go back a second. So number one was that we were going to look at the finances, understand the finances and set financial goals. Secondly, we’re going to do the big three structure around finance, operations, sales, and marketing.
And now we’re going to execute the goals that we’ve set. So one of the best books, again, that I have already referenced is the four disciplines of execution get ahold of that book. It is absolutely fantastic. And it shows you how to execute. Interestingly, in that book, they talk about how everybody’s been on a business call.
Uh, or a business degree or whatever. Uh, we get taught how to do business planning or business strategy, but we don’t get taught how to execute those plans and strategies. People don’t have a business planning problem. They have a business execution problem. The value is not in the. The values and the execution.
So execution is paramount. One of the other things that I’ll recommend for you is another book called ‘Extreme Ownership’ by Jocko Willink, and Leif Babin. Very interesting names. Um, but those guys. Written that book. It is about leadership lessons that they learned as ex Marines in Afghanistan and Iraq.
And, uh, they definitely talk about how to get buy-in for your plan, uh, and how to execute excellently. So that is it for the podcast. I hope you’ve enjoyed this quick overview of the business turnaround plan. Uh, if you do want to go and check out the show notes, remember it’s businessfixer.co.uk
Remember to check out the show notes. I’ll make sure everything’s in there. And until next time, take care sports fans.