1. Cut overheads
Any entrepreneur who has been in business for a few years will agree that overheads want to “walk on two legs”. What this means is that the people in your business have a natural tendency to want to spend money on non-essential stuff and are especially interested in hiring more people to make them feel more important.
If you need to improve your business’ performance, you need to workout what costs an be cut by using a “zero based budgeting” technique. That means, start from zero and justify every cost as if you were starting from scratch. If it isn’t essential, cut it!
2. Drive revenue growth with your best customers
Reducing overheads is great, but by itself it will not create a revolution in your business. To do that, you need to grow profitable revenue!
Start by understanding who your best customers are and then challenge yourself on the benefits that they derive from your product or service. There will likely be a core product or service that adds value to their business but it may be obscured by additional things that are not relevant to the core. If you’re unsure, then go ask them! Check out the turnaround story of Southwest Airlines for a great example of this.
Now, focus on delivering the core product or service that your clients value but do it faster and cheaper. You’ll find all sorts of way to improve this when you remove the noise. Additionally, your clients will love the fact that you’re focusing on their needs.
3. Drive revenue from your core product or service to new customers
With the new clarity on the core value of your product or service, you’re ready to take on the competition. Map out all the industry players that could benefit from your new approach (remember faster and cheaper) and talk to some quality marketing consultants to help sell your message.
Now is not the time to be shy!
4. Cash flow
You are not in this business to make friends, you’re here to generate cash and if your business is in trouble because of previous underperformance, then cash flow is likely under some pressure.
Start by preparing a detailed daily forecast of all your upcoming receipts and payments for the next 13 weeks. Then plot the daily closing cash balances on a chart and compare against your available banking facilities. If you find that you need to improve your short term cash flow, then talk to your major debtors (people that owe you money) about paying faster. Also, talk to your major suppliers about implementing a payment plan that will provide some breathing space while your turnaround plan takes hold. If there is still a problem in the cash flow, talk to your bank or get some professional advice from a good accountant.
If you are particularly worried about the cash position, then you may need some professional solvency advice from a specially qualified accountant.
Importantly, you need to create a cash focus culture in your business. That means everyone having cash generation as a priority of their daily work.
5. Execute, execute, execute!
Almost all business failures share one characteristic, that is they failed to execute on their strategy. Daily life will get in the way and distractions will be readily available. Set strategy and then concentrate on daily execution with relentless effort. Create this culture in the business and do not facilitate anyone who procrastinates.
Resolve to never leave the site of any planning exercise without taking massive action towards the goal.