So you’re probably reading this because your business is in the rut and you’re looking for a business turnaround strategy. This post is all about going to a higher altitude and looking at your business from a different perspective.
This post will help you understand the basic set up of any business and how to view it. This is by far the most effective and successful business turnaround strategy I have used to turn countless businesses around.
Let’s dive straight in.
The Importance Of ‘High-Altitude Thinking’
High-altitude thinking is exactly what it says – taking yourself off the floor (or the ‘Runway’) and looking at your business from a ‘top-down’ view. You may have heard this being called different things like, “Going to the Balcony’ or ‘10,000ft thinking’. It’s all pretty similar stuff.
Imagine you are going on a 5-mile walk in the countryside. You are currently in the middle of a valley and you’re walking right down the middle at 0ft. Your perspective is one where you can see the road, perhaps some cattle, stonewalls, trees, people passing you by, perhaps some cars. But you can’t see your destination as it’s 5 miles away.
You decide to go up one of the hills so you can get a better view of the landscape. You climb the hill to a fairly high altitude. You look out…
Now you are looking at the same things – the trees, cattle, walls etc. But they now seem small, almost insignificant from this height. They seem this way because now you can see a lot more. Things that were always there and once hidden from view are now in plain sight. You’re looking at the bigger picture.
All of a sudden, you see your 5-mile destination in the distance. Even better, you can see the roads that lead the quickest way there.
Now you have clarity.
Now you have a plan.
All because you changed your perspective.
You went to a higher altitude…
The Business Triangle
The first thing in this business turnaround strategy is to look at your business with the following perspective.
I call this, ‘The Business Triangle’.
As you can see from this, every business is made up of 3 core areas:
- Sales & Marketing
Every problem in a business can be traced back to one or all 3 of these areas.
Let’s look at each one in more detail…
By far, the most important part of any business. Finance is the core department in any business. When I do any business turnaround, most of the problems are in this area.
This area can be broken down into a few sub-areas:
- Understanding of the 3 financial statements
- Finance department set up
- Lack of commerciality in the Finance Department
- No clear financial goals
- Lack of cash/financing
Understanding the 3 Financial Statements:
When was the last time you really looked at your Management Accounts? And I mean really looked at them.
Your financial statements all tell you a story:
- Profit & Loss (P&L) tells you how profitable you are
- Cash flow tells you how quickly you are able to move cash through the business and realise cash from invoice to hitting your account.
- The Balance Sheet tells you your net worth (how much money you have minus how much money you owe)
All 3 statements combined tell you your ‘Economic Health’. For more on how to understand your economic health, check out this post here.
The first starting point is to understand your starting point.
Do you have a profitability problem?
Are your customers paying you on time?
Have you borrowed too much?
What is the problem?
Commerciality In The Finance Department
Once you understand what the exact problem is then you can get to work on fixing it. This is why I said you need commerciality in the Finance Department.
Anybody can show me the financial statements and provide a summary. I don’t need that! I can read the statements.
I need commerciality. I need a finance person to tell me the drivers behind the numbers. They need to tell me why a number has gone up or down. They need to tell me if a particular number is good, bad or ugly. They need to highlight risks, tell me what Operations or Sales need to do to fix the picture. That is commerciality.
Set Financial Goals
From that, you can then set financial goals for each financial statement. For example, if you are wanting to increase profitability then be specific.
We will increase EBITDA from £[X] to £[Y] by [WHEN]
This is a clear, specific goal-setting formula taken from ‘The 4 Disciplines of Execution’ by the Frankin Covey Institute. For more on how to set goals for your business, check this post out.
For me, Operations really comes down to your ‘modus operandi’, your way of working.
This area can be broken down into the following areas:
In a business turnaround, these need to be ‘tight’. Great businesses are built on solid structure and process. There are no shortcuts. If your business is ‘loose’ then so will your results.
When I talk about ‘structure’ I mean a few things.
What is your corporate governance structure? Who’s the boss? Who reports into who? Who is responsible for each area or member of staff?
Some businesses like to ‘keep it laid back.’ Wrong! That’s why you’re in this mess in the first place.
Corporate governance brings clarity around who is responsible. It sets responsibility and accountability. Once people have clarity on their responsibilities and accountabilities then they can take ownership. In a business, people need to take ownership of their areas. This is a tight structure. There’s no ambiguity and no place to hide.
By this I mean – how does your business organise itself?
What systems do you use? Do you use project management software? Do you use personal task managers? How do you stay on top of things?
One of the first things I teach people is the ‘Getting Things Done’ method by David Allen.
If your people aren’t organised, then you haven’t got a chance in hell that you will turn your failing business around. Stop burying your head in the sand. It’s just not going to happen.
Sometimes, you don’t need a business turnaround strategy – you just need your people to be organised!
What’s your culture when it comes to meetings? Are you laid back again? Again, wrong!
You need to be tight!
In my experience, businesses are on either side of the spectrum. Either they have too many meetings or they don’t have enough meetings.
Meetings have a bad rep because the majority of businesses don’t know how to run good meetings. We’ve all been in meetings that had no purpose, no actions and you didn’t even need to be there.
I advocate freeing up your people as much as possible to get the job done. You don’t want your key team to go to work to attend meetings. When is the work going to get done?
Therefore I install the following in any business:
- Key meetings are diarised (as infrequently as possible)
- Daily meetings are changed to scrums
You have to have some meetings. These can include meetings where you set the strategy for the quarter. That’s important! You need a Finance Meeting! For more on what a Finance Meeting is (and should be), check this post out.
Scrums are short, quick and efficient meetings that take no longer than 10 minutes. They come from lean or agile methodology.
When done properly, scrums are the best way to drive performance. Quite often the agenda is focused on what the teams are trying to get done that day. They will set commitments and ensure they take ownership and achieve it by that day.
A great resource on Scrums is the Scrum Master Toolbox podcast.
If there’s a problem, then it means one of 2 things:
- There’s no process in place
- The process has not been followed
That’s simple, isn’t it? If you aren’t a process-driven business, then you need to start implementing formal processes. You may feel that it is a bit bureaucratic but it’s necessary. Your job is not to please people. You’re not a politician. Your job is to get the job done.
Processes need to be drafted and rolled out in a business. Some businesses like to gather teams to go through the process and conduct a check of understanding. Some businesses may send out a memo or email. Either way, people need to know about the process, they need to understand it and then police it.
Sales & Marketing
Quite simply, if you don’t have enough sales then you are in big trouble. I group Sales & Marketing together because they feed each other. You can class them as one team. If Marketing don’t do their job then it hinders Sales. If Sales don’t do their job (using the Marketing materials) then they have let down the Marketing department. They have a symbiotic relationship.
Sales & Marketing teams quite often have fraught and tense relationships. The breakdown often occurs when they have a ‘Them vs Us’ attitude. This isn’t helpful.
The best Sales & Marketing relationships I have seen (and helped build) are ones where:
- They see themselves as one team
- They are aligned on the plan
- Comms are strong
- Deadlines are hit
- Discussion is kept healthy
So there you have it. By viewing your business at a high altitude like this, you will quickly be able to determine where the problems are occurring. This high altitude may seem simple, but that’s the beauty of it.
By creating clear goals for each area, you will be on the road to business recovery. Now doesn’t that sound like a good business turnaround strategy?…