Not long ago, before the quarantine, I met an interesting Uber driver in Nashville. We had a long drive to the airport, so I got to know him and ask some questions. He was from England and had spent his career turning around 12 companies all over Europe and the United States. The last company he turned around was in Nashville, and then he retired. He said that all the companies were at a point of complete collapse. They were possibly weeks away from bankruptcy.
Today, we are are in an economic crisis that nobody has seen before. It is so hard to say at the writing of this how bad it will be. Small businesses are having to put faith in the Small Business Administration (SBA) to save their company through the Paycheck Protection Program or the Economic Injury Disaster Loans. I would highly recommend you applying to both.
We know deep down that the government is not going to save us. It might buy us some time, or we could get some additional cash, which is much needed. If we were in a financial struggle before this, the problem is still there festering. This new crisis will change the business world going forward, so we have to be prepared. I thought I would apply some of the principles this turnaround specialist told me to the current environment.
Below are five key points to turning your business around quickly.
1. Look for the Spark and Round Holes
I am using his exact words when he says to look for the “spark” and “round holes”. He says to find the people that are performing exceptionally well and get them to help. In a crisis, some people are stepping up and are the high performers and leaders. You want to find those people quickly.
Round holes are making sure you have people in the right positions based on their expertise, interests, and skill level. You want people in the roles they should be. Make sure you do not have “square pegs” in “round holes.” If someone is not happy in what they are doing, you should get them in the right place or part ways if needed.
2. Get Rid of What is Unprofitable
It can be challenging for a business to fully understand what is unprofitable if they don’t have the financial details needed. Do you know which products, clients, and services are the most or least profitable? If you have an extremely unprofitable client, look to understand how to get them more profitable through efficiencies or more revenue. If this cannot happen, it never hurts to part ways. Are there products that are no longer necessary? Replace your unprofitable clients, services, and products with profitable ones.
I realize all of this is easier said than done. The first step is to understand your current financial profitability. Get a CFO to help you with this. Once you know this, you can start to put together a plan to improve profitability. You will find that this can help with pricing, upselling your customers, and finding operational efficiencies.
3. Get Smaller if Needed. Less is More.
Once you understand what is less profitable, you may find it better to just get smaller. Getting smaller involves cutting clients, services, products, and employees. We know that pruning is essential at times in nature, and it is good in business also. In a crisis, it becomes even more necessary. I realize that the Paycheck Protection Program incentivizes you to keep employees longer. I don’t recommend laying people off if you get this loan. You want as much as possible to be forgiven. After eight weeks, you can reassess again. No matter what, you still will have to prune. As in nature, pruning always leads to more growth, and this can happen in business also.
4. Get Feedback from Everyone and Listen
Ask your leaders and employees for feedback. Ask them for ideas for efficiencies or how to cut expenses and for ideas to improve the business. The leaders and higher performers will have opinions, so then you have to listen. It can be a challenge in this current crisis because many people are still in shock.
Some people are overreacting, and some people have not yet accepted the horrible effect this will have on the economy. I know that I have had this same problem myself. I read that it is similar to the grieving process. Check this article out for more.
5. Communicate often
I don’t think we can communicate enough to our employees and customers in a crisis. You probably should figure out a way through email, video conferencing, group calls, and one on one meetings to communicate as much as possible.
One thing that this turnaround specialist mentioned was sharing financials with everyone. Sharing financials can be a challenge if everyone does not understand them – especially the leaders of your organization. You can also share the basics of revenue and expenses with everyone. Sometimes people will start thinking their job is in jeopardy if you share financials with them. I think it is better just to be upfront with the challenge you are facing. Maybe they will step up. If they don’t step up, then they are not the “Spark” employees, and perhaps ones you have to let go if they don’t get on board. I know this sounds harsh, but you want your business to succeed, and that has to be a high priority for all the other employees.
Turning around a business or surviving a crisis is not easy. It will take more work and difficult decisions. Make sure you have the financial information you need to be the most objective. If you don’t have it, find resources to help you. Getting useful financial details could take a little time, but it will be helpful going forward. If we can all focus on doing these things, we can make this turnaround just like all 12 companies my Uber driver helped to survive.