All too late in a crisis, a company can bring in a turnaround consultant or coach and expect this decision to make big changes in their situation. What they don’t realise is that every turnaround relies on a holistic response to the problem, not just the influence of a particular person.
Your business coach can give you recommendations based on what your best options are, but it is still up to you to take charge. The best thing you can do to preempt your business reaching the too-late stage is to lead your company out of trouble using a strategic approach.
Following the right plans
It is important to know what you are responding to so you can avoid falling into a mismanagement trap. Many times, leaders can underestimate the effect of blindly pushing through early struggles, which results in them facing larger crises later on.
Start with the basics. Assess your current business plan and see if it still makes sense to follow it. Most plans have indicators of success that you can check on prior to the plan being fully executed. If you notice that you’ve been missing targets consistently, your plan may be what’s bringing your business to the brink. You can also check on your company’s operational performance and key metrics for areas you might need to address.
Focusing on cash flow
The most crucial questions is, are you spending more cash than you’re generating? Available cash flow is one of the most basic measures of a business’s success, so it’s something important to focus on.
Balance between thinking of short-term liquidity obligations and long-term goals. If you aren’t careful, the pressure to increase cash flow immediately using drastic methods could lead to sacrificing your company’s overall financial health. It is also responsible to stay on top of the costs of running your business while waiting on forecasted revenues. The time it takes for your investments to generate returns could be the time it takes for your vital funds to run out.
Presenting the situation
Become the leader your employees need by communicating in a manner that gets them on board. Instead of immediately sending out data reports and to-do's, talk to your employees about the status of your company, the goals you’re trying to achieve, the obstacles you’re facing, and how the workforce in particular can contribute to the situation. In essence, give them a narrative they can invest in and feel a shared sense of urgency about.
On your end, it is a way of filtering the information they need from what they don't. On theirs, it is a powerful motivator and a way to understand exactly what you expect from them.
Focusing on culture
Once the business plan has been re-focused and communicated to your staff, the only thing left to do is manage how it’s executed. This relies largely on people, and is the greatest source of problems related to why a business keeps struggling.
Get your employees excited for change by creating a culture of proactiveness. If you teach people to focus on their strengths and what they can build on, they will be more likely to contribute to your efforts. Having an empowering environment is good for your workforce, regardless of being in crisis or not. In contrast, people who resist change and who stay on the fence about things does not help your business at all.
There are many ways of approaching crisis management, but the strategy above depicts what most coaches would recommend business leaders to start with. You can learn more about how to strengthen the 5 Pillars of Your Business by downloading our free eBook.
Yakola, D. (2014, March). Ten Tips for Leading Companies Out of Crisis [Web article]. Retrieved from http://www.mckinsey.com/insights/corporate_finance/ten_tips_for_leading_companies_out_of_crisis