We would like to help!
During this difficult time with COVID-19, we are committed to help you and your business.
Our 30 Day Troubled Business Turnaround course is now entirely free to anyone who signs up.
(A saving of $99).
We hope that this will help you get your business back on track.
Is Your Business Enterprise Experiencing Financially Tough Times?
Many businesses, both large and small, for profit and not for profit, hit tough times and often don't survive.
If you are experiencing tough times, this introductory article will assist you with a quick troubled business diagnosis.
This introductory article is designed as a lead into the Turnaround30: Rapid Stabilisation of a Business in Trouble course.
The course examines methods of (1) Rapidly stabilising your business and then (2) Turning around, a business that is experiencing a tough patch.
It is designed to carry out within a 30 day period of intense activity. The turnaround will happen as quickly as possible.
Rapid Turnaround in 30 Days (Turnaround30) is one of Profit Savvy's business strategy courses. (yellow belt).
- Achieve a rapid turnaround of a difficult financial state in your business.
- By choosing the suggestions that are most suited to your business and then
- Move quickly - speed is of the essence to prevent further decline in the business.
The 30 day period will empower your team with the idea that rapid activity and rapid results are possible.
A team can work more actively than normal in a "sprint" for 30 days if they know that there is a goal/target/destination at the end of that 30 days.
In this case, it is survival.
How to proceed
Read through this article to become familiar with the content in general terms. Jot down ideas on where to dive in and get started as you read.
We reference other Profit Savvy articles, which gives you a chance to read more extensively.
Registration for the course will give you complete access to the Profit Savvy KnowledgeBase for 30 days.
For this Quick Diagnosis, register now for 48hrs free access and read the articles below.
- The 80/20 Rule (see Amazing 80/20 Rule) says only a few things are important and you should focus on them.
- You can not improve your business until you find and improve the single major problem you face. Fixing minor issues and overlooking the major one means you will be slow to improve. The Theory of Constraints will give you this knowledge (see Theory of Constraints).
- Using 80/20 and Theory of Constraints will speed up your turnaround enormously.
Then read and reread the following advice and pick the areas you think are most in need of improvement.
Determine, in as short time as possible, what has caused the downturn in your business. You want to at least slow down or stop the root cause. Then remove it or turn it around.
- You may have the luxury of knowing what your major problems are already.
Example: A new competitor has opened up nearby and is drowning your market.
- It is quite common to find financial stress has crept up over time. You may not have given much thought to what has caused the problem.
Use Profit Savvy's problem solving tool: 5 Whys Problem Solving Tool.
This tool rapidly identifies possible causes of a problem. You can then work on those causes.
- You may be in the fortunate position of having good historical records.
- Compare periods, when you were more successful, with the current to search for reasons for the change.
Example: The annual accounts prepared by an Accountant for taxation purposes.
- Identify where the most significant changes have happened.
- Ask yourself: "how did these changes happen without me noticing them?"
- Resolve to increase the frequency at which you study these records (say quarterly rather than annually). You will come across the strengths and weaknesses of your business more rapidly.
Five Focus Areas
In Turnaround30 there are 5 areas within your business on which we can focus attention.
Your options are to:
- Focus attention on all areas but your progress will likely be slow as you spend time on unimportant things to the detriment of the important.
- Choose to focus on the ones that seem to be the reason why you are experiencing problems.
- Focus on the ones which are the easiest to turnaround.
- Remember, speed is your goal here. Focus on things that you can in a short time frame.
- Come back and revisit any that remain.
The 5 focus areas are:
Can you see any reasons for change?
- Your Income (Revenue)
- There is often ability to get short term increases in your Income that might help to stabilise your business.
- Many of them may seem a bit drastic. You may be surrendering some of your "sacred cows".
- If you are focused on survival and a quick turnaround, some of those "sacred cows" may have to go.
- Your Cost of Goods Sold (COGS). Also called Variable Costs.
Note: Income – COGS = Gross Profit
- It refers to any expense that is only incurred when you produce an item.
- COGS is:
• Raw materials that go into the product.
• Consumables like energy.
• Casual or outsourced labour.
- Permanent labour is more of a fixed cost because you can’t raise or lower it easily.
- Your Fixed Costs (Overheads).
Note: COGS – Fixed Costs = Net Profit
- These are the expenses of your business that do not vary to any great extent with the amount of production or sales that you undertake.
- They include things like staff, rents and finance/loan repayments.
- You may be able to immediately reduce or change some of these fixed costs.
- This will stabilise the business and get it back onto a path of sustainability.
- Your Cashflow.
- Cashflow is the lifeblood of your business. We cannot stress this enough.
- Things like Revenue and Profit can be fudged whereas cash in the bank (Cashflow) cannot.
- Revenue of $1,000,000 might look great until you realise the Expenses are $2,000,000.
- Your necessary Business Metrics.
- Were you surprised at what you found when you first looked at your accounting records?
- This should indicate two things to you:
- First - you should increase the frequency at which you look at your results.
- You will be much less surprised.
- You can respond sooner to any positive or negative change in the trends from your reports.
- This will either minimise losses or maximise gains.
- Second – you need to give thought to the things to look for when reviewing your records.
- We call these “metrics” referring to the fact that they measure things.
- A business that looks at their books once every 12 months is going to experience surprises and probably difficulties.
- Look at your books each month or at the least, each quarter, to measure a few important trends.
The one safe metric of your financial position is your Cashflow.
- This is your ability to convert labour and raw materials into cash at the Bank.
- It is the volume of money hitting your bank account.
- The Turnaround30 course will show you how to create a spreadsheet to keep track of these metrics.
Turnaround30 will go into great detail on how to Increase, Decrease and Improve the areas above for YOUR business.
The areas focused on will be dependant on the outcome of your Troubled Business Diagnosis.
Can your business afford not to complete the Turnaround30 course?
Enrol in The Course NOW
Receive greater detail on Turning Around Your Troubled Business
Solutions to work through for your particular problem/s that have been highlighted with the Diagnosis.
You will be very surprised to see how little things need to change for you to
Turnaround Your Financially Troubled Business.