Revive Your Business: The Benefits of Turnaround Consulting

Picture this – Brandon’s organization has been witnessing a steady decline in sales for the past few quarters, with the company losing its market share rapidly. Seeing the poor sales figures has him worried that the organization will soon run out of cash.

He is aware that radical changes are needed to maintain cash flow and position the company on leveled grounds, but he isn’t sure where to start. This CEO has on his plate the mammoth task of devising an effective strategy that saves the organization, and this involves getting everyone on board.

Time is also not on his side because if he doesn’t act quickly, the company will have no funds to pay employee salaries, utilities, rent, etc. 

Do you relate to that scenario?

If yes, know that all kinds of companies (big, small, and those in-between) face such a scenario, especially when macroeconomic factors like rising inflation, interest rates, falling unemployment rates, etc., are involved.

What your business needs is to be turned around from such a situation are business consultants brisbane. This is a massive project necessitating the correction of poor decision-making and wrong strategies. Thankfully, you don’t have to do all this alone. Expert turnaround consultants can help your business get back on track.

What is Turnaround Business Consulting?

Turnaround consulting for business includes services that analyze a business’ current market performance and financial reports to identify the root of a cash flow crisis. This process involves a detailed review of all business processes to assess what went wrong, what may go wrong, and the severity of the damage.

It is not the same as normal business management. According to CFOshare, turnaround business consulting deals with crisis management where immediate attention is needed to correct bad debts and business losses. A custom approach is taken to pivot the business back to profitability and prevent the recurrence of such a situation.

Benefits of Turnaround Consulting

According to the Harvard Business Review, the corporate sick list has been occupied by large and top companies like the Commodore, Chrysler, Bank of America, and Fotomat, among others. No organization is perfectly safe in today’s shaky business grounds where everyone must earn their right to compete daily.

Here’s how turnaround business consulting will help you stay relevant in a ruthless market marked by cut-throat competition, volatility, and bankruptcies.

Comprehensive Business Analysis

The primary reason why businesses fail to recover is that they do not have a clear picture of their current operational and financial performance. Once a thorough report is prepared and analyzed, cues can be taken from the underlying issues discovered to implement strategies accordingly.

Turnaround consultants start by giving you a complete view of what’s going on, why the current strategies are not working, and what changes are needed to rectify the issue. Through their expertise, you will get different analysis reports for a 360-degree view, including (but not limited to) –

SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis

This analysis aims to identify the internal strengths and weaknesses of the organization. It is conducted concerning the current market (opportunities and threats) to see if the company can compete using its resources.

SWOT Analysis offers insight into competing firms, fosters collaboration, highlights possible opportunities that may help with business recovery, and identifies areas that need upgrades (equipment, employee skills, etc.) 

MOST (Mission Objective Strategy Tactics) Analysis

This analysis focuses on the organization’s internal environment to improve company culture and get everyone on the same page. Turnaround consultants will assess if the company’s mission and objectives are laid down clearly, and if relevant short and long-term strategies are in place to achieve them.

MOST Analysis helps the company to communicate its purpose in clear terms, develop transformation roadmaps, align objectives with stakeholders, and avoid daily distractions through goal focus. 

PEST (Political Economic Social Technological) Analysis –

This analysis communicates to the organization potential external factors that may offer new opportunities for growth or pose threats to success. These factors may include innovation, market changes, changing customer preferences, and population growth rate.

Some benefits of this analysis include better alignment with emerging trends, guaranteed compliance with new laws, preparedness for threats, and increased awareness of growth opportunities.

Through comprehensive business analysis, organizations derive benefits like –

• Increased operational performance
• Reduced costs
• Strategic risk avoidance
• Better team collaboration
• Effective decision-making
• Identification of the business’ market status

Strategic Planning

Up until this point, your organization has been suffering from industrial sickness due to poor decisions and misaligned goals and objectives. Just like bodily ill-health requires dramatic lifestyle changes, industrial sickness also needs a complete strategy change.

But which strategy will help your business recover from its losses? Turnaround consulting services will help you plan and execute a definite organization strategy for long-term sales increase and revenue generation. Some of the major strategies include –

Cost-Efficiency Strategy

This strategy is usually the first step in strategy planning because it has immediate effects, is easy to implement, and helps stabilize costs. The strategy could involve tactics like reducing inventory, increasing account payables, and investing in diversification.

Increased Focus on Core Business Operations

Turnaround management means the CEO has little time with which to bring about substantial changes. One way to make the most of the time is to focus only on core business activities in the short run.

One instance of this would be a company targeting only loyal customers for a new product line. Once it has established a competitive edge and garnered enough attention, it proceeds to gain footing in other lucrative customer segments.

Asset Retrenchment Strategy

Companies, where low performance is a major roadblock to success, can benefit from the asset retrenchment strategy. Under this method, low or non-performing areas of the organization are identified and removed.

This strategy is best suited for companies where the cash flow system is not too adversely affected. An example would be disposing of obsolete assets and investing in updated ones.

Changes in Leadership

The company’s C-level executives are responsible for driving innovation and change, but more often than not, these positions are contributing to stagnancy. If such is the case, the business may improve with a managerial change – hiring young and growth-oriented CFOs, managers, CTOs, etc. They can bring a new perspective and change existing operations to improve departmental performance.

The above-mentioned strategies together help the organization to –

• Improve staff retention
• Better adapt to market changes
• Increase profitability through better sales and marketing targets
• Create business longevity
• Develop a clear sense of direction for resource allocation, hiring decisions, etc.
• Improve operational efficiency through effective leadership

Even multi-billion organizations like Dell have had to change their strategies to maintain business success. In 2006, Dell decided to remove all middlemen and directly sell its products to customers. This move led to huge losses for the company. In 2007, it employed a turnaround strategy of re-introducing retailers, which placed it among the largest computer retail brands.

Improved Cost and Risk Management

When businesses do not manage their costs and risks properly, they tend to get knocked down in one fell swoop due to sudden market changes in exchange rates, economic policies, geopolitical disturbances, etc. There are also internal risks to consider, including lack of insurance, information breaches, and more.

Turnaround consultants will suggest strategies that help manage organizational risks as well as costs based on the current economic environment. Some of the top strategies for risk management could include – limiting liability, purchasing insurance, having a quality assurance program in place, and identifying high-risk customers.

Likewise, turnaround consultants may suggest the following cost management strategies – proper budgeting (short and long-term), controlling fixed costs, reducing variable costs, and upgrading to smart accounting software, among others.

These strategies together will help your business in the following ways –

Avoidance of Catastrophic Events

When a company’s costs and risks are under control, it is prepared to face all kinds of market shocks. Besides day-to-day shocks, there can be catastrophic incidents, also known as black swan events, like natural calamities, burglaries or thefts, cyber breaches, etc.

Though extremely rare, such events can make a company go bankrupt overnight. When existing vulnerabilities are tackled through better security and relevant insurance coverage, businesses need not worry about catastrophes.

Relevance in a Competitive Landscape

There are only two types of companies during favorable market conditions – efficiently and poorly managed. When critical times arrive, only one of the two stays afloat.

The secret of efficiently managed companies is that they minimize losses through timely risk and cost management. Naturally, they survive recessions and other harsh times with enough cash in hand, something which gives them a competitive edge.

Better Financial Health

Companies, where risk and cost management strategies are up-to-date, have complete control of their finances. They have a detailed understanding of their current finances, have considered (and tackled) risks that may affect cash flow, and have trimmed wastage of resources. This enables them to create accurate short and long-term budgets where funds are properly allocated to achieve goals.

The Bottom Line

According to McKinsey’s Business Risk and Resilience, businesses in 2023 are sailing on highly turbulent waters where new risks are emerging every day. It stressed the importance of business resiliency enforced by the CEO and management teams, without which it is difficult to survive the challenging times.

As for businesses already below the waters, a strategic turnaround plan is crucial for recovery. This plan is not just for companies suffering from massive debts and losses but even for those that are facing inventory mismanagement issues, employee disengagement, and poor customer satisfaction.

A reliable turnaround consultant will suggest multiple ways to make a quick positive difference in business growth followed by long-term plans. If your business needs help to stay afloat, don’t hesitate to ask the experts!