Turnaround Strategy
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What is a turnaround strategy?
Often referred to as a turnaround, it is financial recovery process for a company that has been performing poorly for some time. In order for a turnaround strategy to be executed successfully, the business must identify and accept its problems, consider any necessary changes such as a restructure or alternative finance, and develop and implement an effective strategy for the future. The exact nature of the recovery strategy can vary drastically depending on the company’s circumstances.
Why is a turnaround strategy needed?
A turnaround strategy will be required for a poorly performing business, without which it will be likely that the business will fail and have to enter into a formal insolvency process. Sometimes a poorly performing company will require additional funding, however a lender would only be confident in providing the additional funds if a proper turnaround strategy is in place. Below are some indicators that show a turnaround may be required:
- Continuous financial loss
- Poor management
- Failing strategies
- Negative cash flow
- A high rate of employee attrition
- Declining share in the market
- Uncompetitive services or products
How to draft a turnaround strategy
- Look at the problem. Why is your company not performing to plan? The answers to this will likely lie in your financial reports.
- Aim to improve the business’ overall performance by looking at and redirecting your strategy. This will depend entirely on where the problem lies and the strategy will vary depending on whether it exists in sales or costs, for example.
- What exactly needs to happen in order to achieve your goal? Do more sales need to be made from existing customers? Do you need to attract more customers? Do you need to focus on a smaller volume of more profitable work rather than a large quantity of low margin work? Does employee productivity need improving? Do you have the right people in the right positions?
- Does the company require additional funding to go alongside a turnaround strategy, providing sufficient working capital to implement the changes which need to be made?
Find out more about turnaround strategies
Having a proper turnaround strategy in place could be vital to the survival of your business, typically you will only get one shot at making this work so it’s important that you get it right first time. We have internal expertise in this field at ICS as well as relationships with a number of specialist turnaround practitioners, given the very specialist nature and skill set required, so are ideally placed to ensure you get the right advice and guidance to help put together and implement a successful turnaround strategy. Visit our contact us page and fill in the form to get in touch or give our team a call on 0800 731 2466.
