2. Logical Steps To Save a Failing Business
You need to follow a simple bullet-proof step by step method that will fix and turnaround you're failing small business and keep it fixed. Here is a series of logical steps that will guide you to a decision or course of action. These steps are to help you survive the temporary ‘business crises’, save your businesses from the edge of failure and regain your profitability. The process actually works for small business and is not based on some abstract theory or turnaround methods used by big companies. It does not require a lot of money and takes a little time and some know-how and a lot of action.
For full details on each of the following steps you can read the article - 10 Proven Business Turnaround Strategy Steps
3. The Secret To a Successful Turnaround
Turning your business around is all about "Numbers". As you can see from the examples below it is simple to make a huge impact on your profit and growth, but you need to keep score. You need to know your numbers in your business. If you don’t know your numbers you don't know your business and you will not know what to fix and if it is working.
"What you don't measure you can't manage".
The smallest wins in results will motivate you into more action. It will create belief and hope to continue.
In the examples below I use my simple business tool that allows you to visualize your business as a system, broken down into simple and practical but very important key success drivers. Turning your business into a visual one that will bring focus, clarity and understanding of the actions and results necessary for success. This tool is Absolutely Free for you to use.(See images below)
The tool lets you experiment with your current reality – without jeopardizing your business. By playing around with your numbers in the tool you will gain instant feedback on your planned actions, and find your best ideal business scenario. Try it, you will not regret it
These are the basic numbers that you have to evaluate, track, manage and consistently improve in your business:
There are only 4 factors affecting the profitability and growth of any business, including yours. You don’t have to make big improvements in each of these 4 areas to see massive results. (See images below) These drivers are:
- Your total sales every month.
- Your variable costs you have in producing the products and services you sell. These are variable costs because they vary as sales increase or decrease.
- The markup % or the price you charge.
- Your fixed costs, because they do not change.
Then there are 4 factors affecting the cash flow of any business, These drivers are:
- Current Cash, Bank Account balance.
- Average Receivables and Receivable Collection Days.
- Average Payables and Payables Payment Days.
- Average Inventory.
Then there are 4 factors affecting the sales of any business, These drivers are:
- Total leads or potential customers you meet every month.
- How many of these leads you convert into customers.
- How frequency customers buy from you every month.
- The average amount of money a customer spend every time they buy from you.
4. To Save Your Business You Must Keep A "Scoreboard"
Allow me to demonstrate how small changes can make a huge difference in your business - if you have a “scoreboard”
But without a scoreboard, your numbers will not have any meaning. You need to see the progress in real time. There is big power in small wins. Your best results will come when you know the “score”.
Let's take this business for example below that is doing 85 600p/m in Sales. The Variable Cost or COGS for these sales were 67 700p/m with a Markup % of 22.8% on products. The monthly Fixed Cost for running the business was 14 800p/m, making a Net Profit of
1 100p/m (1.3% of Total Sales)
Look what happens if we improve each of them with only 1 %... A massive 155% increase in profit.
Look what happens if we improve each of them with only 2 %... A massive 312% increase in profit.
5. Keep Focused On What's Important
Success is won or lost through execution. I've seen many business owners get past the immediate cash crisis and calm their creditors down, only to fail to execute their turnaround plans. They stop focusing on profit and cash flow, lose their discipline of daily measurement, and turn back to sales where the fun is.
The result is sliding back to negative cash flow, missed payments, the owner loses all credibility and there is no recovery. To avoid this, stick to your plan and keep a “scoreboard” You can’t play the game of business without keeping score, otherwise you’re not going to know if you are winning or losing the game.
6. Successfully Implement Your Strategies.
Know how to successfully implement your business strategies. But before you start making changes you need to evaluate your business current reality. This is a must for anyone in business. To examine your entire business from top to bottom, piece by piece. Once you figure out which parts are working, and which parts of your business aren't working, you can start fixing them or get rid of them entirely - so that they will stop wrecking your business and starts to perform amazingly. You need to look at the ‘whole picture’. By having a clear picture you will be ready to identify and eliminate obstacles that are holding you back and create a step-by-step plan of action to achieve all your goals.
For full details on each of the following steps you can read the article: How To Implement Your Business Strategies: Step by Step
Now it's your turn. Good luck.