Before you start a turnaround, planning is always important. You need to have a detailed plan and focus on executing it well. Setting the right plan is imperative not just for achieving a successful outcome but also realising goals expeditiously and efficiently. To help you get it right, here are 25 questions to consider before jumping into a turnaround process:
Communication
1. Have we properly established how to communicate and message the turnaround plan?
Management
2. How will the progression of the turnaround be monitored and reviewed?
Cash management
3. What does the company need to do to have a reliable 13 week cash flow forecast?
4. How do we develop the cash culture of the company?
Financial analysis
5. Where/what are profitable parts of the operations and how can they be increased/expanded?
6. Have the true causes of financial underperformance been identified?
7. Are there any “lazy” assets which could be sold or used for finance?
Forecasts
8. Is the forecast realistic or does it look like a hockey stick?
9. Have we established the KPIs and lead indicators to monitor and measure performance?
People
10. Is the right management team in place?
11. Do they have the skills, culture and bandwith to complete what is required?
12. Should we recruit interim / specialist executive resources to drive parts of the turnaround?
13. Do management need to be incentivised in the turnaround?
Transaction solutions
14. Is it possible to trade out of the current financial position or is a transaction required to fix the situation?
15. What type of debt or equity transaction partner does the company need? For instance a trade buyer, company seeking vertical integration, private equity investor, mezzanine financier etc.
16. What does the company need to do identify and attract a new financier or investor?
Financiers
17. How does the company improve the relationship with its existing financiers?
18. Are there issues that need to be communicated immediately to financiers such as a funding requirement or expected breach of facility covenants?
Strategy
19. How have market conditions changed and does the turnaround strategy reflect these?
20. Does the turnaround strategy involve change or is the company committing to repeat the same mistakes?
21. Does the strategy align with the identified reasons for underperformance?
22. Have all options been considered in relation to growing revenue, cutting costs, expanding/contracting the business, product lines etc
Mindset
23. Is the company making the hard decisions to achieve the turnaround? Look for “sacred cows”!
24. Do we have a Plan B, C and D?
25. Does the company accept the reality of the current situation or is there denial in relation to the position and/or what is required to fix it?
It is difficult to obtain the buy in and ongoing support of management and staff for the turnaround if the plan is regularly being materially changed or there are inconsistencies in messaging and approach. Therefore getting the planning right upfront is critical. Finally, obtaining an independent view in relation to a turnaround plan is always a good idea. An independent party in this sense, is someone who is separated from the day to day management of the business and could for instance be the board, a mentor or adviser.
If you would like a no obligation, confidential discussion about turnaround management and executive solutions, please contact me at svertullo@integralfinancial.net.au.