Understanding Turnaround Management
Running a business can be a risky proposition. There is a nearly endless list of things that can go wrong, but it can be extremely difficult to know what to do when things start to get out of hand. Sometimes it is even more difficult to recognize that things are getting out of hand in the first place.
It takes a wise business owner to recognize when his or her company needs help, but if you are willing to admit there is a problem, then turnaround management is available to help prevent a downward spiral and get your company back on the right track.
What is it?
Turnaround management is a process of renewing or repositioning a troubled company through analysis and in-depth planning. It is often linked to refreshing the management and leadership of the company, and there are dedicated turnaround managers who will often join the company as an interim manager for a duration lasting between a few months to a couple years depending on how long it takes to get the company back on track. Turnaround managers will seek out any and all methods for fixing a “broken” company, and may even pursue bankruptcy as a relief method.
How does it work?
Any turnaround management process will start with an in-depth analysis of the company in order to pinpoint exactly what has gone wrong. Turnaround managers may review the management of the company, do a root failure cause analysis, conduct a SWOT analysis to determine the strengths and weaknesses of your business, and more.
Next, they will take action to remedy the situation based on their findings. There are a number of techniques that can be used to help turnaround a company depending on the specific situation and the owner’s goals. The most commonly utilized techniques are:
Retrenchment is the process whereby the company seeks to hit the brakes on its losses and struggles by taking lots of short-term actions to lessen the scope of the company. This can include things like selling off assets, downsizing, and ceasing unprofitable aspects of the business.
Repositioning is essentially a pivot move where the company seeks to innovate or change its image in order to reposition itself in the market in a way that will be more successful.
Replacement is generally characterized by extensive changes to the management, such as the CEO of the company and other executives, in order to make room for bringing in managers with different experience and backgrounds that can help spur change within the company.
Finally, renewal is similar to retrenchment, but with an eye towards long-term actions. These actions could include restructuring the organization or developing new markets.
If your business is struggling, turnaround management could be the answer to getting the company you’ve worked so hard to build back on track. The business and bankruptcy law firm of Maxwell Dunn is knowledgeable and experienced when it comes to turnaround management, and we will work to find solutions that will strengthen your business and position your for long-term success. Give us a call to learn more.