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Thread: Ten steps to a successful turnaround

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    Silver Member Vincent's Avatar
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    Ten steps to a successful turnaround

    Every day business owners all over South Africa face decisions about how to transform their business and take it to the next level. Executives who have turned-around large companies usually and with regularity have the ability to cut large numbers of employees, tap pension funds, apply to banks for infusion of capital, and sell off assets to raise cash to decrease debt.
    Although not demeaning the accomplishments of these people, few small and midsize companies can make such dramatic changes. These businesses can have a difficult time getting a line of credit from a bank, and frequently don't have meaningful assets to sell to increase the company's cash position, and can't afford to lay off large numbers of people.
    Companies usually don’t find themselves in trouble overnight. It happens over a period of a few months to a couple of years.
    Below are ten steps that you can implement for a successful turnaround.

    Step 1: Write A Business Turnaround Plan
    Rarely do companies who write and maintain plans on a regular basis get into trouble. Plans chronicle the good and bad of the past and set a vision for the future. What type of plan must be written? Is it a formal plan – for external use or informal for internal use.
    Investors, management, and employees all need to know what the company’s future plans are. They need to see where they fit in, how they can help, and to share suggestions based on their expertise that will help the company succeed.

    Step 2: Meet With Key Personnel
    You must get the key people in the business together to have a no-holds-barred discussion on how to fix the company. Don’t go into meetings without a plan of your own. People lose confidence in leaders who lack a plan and vision for their business. The key in this type of meeting is to be self-assured, open-minded, and flexible.

    Step 3: Revise Plans

    After listening to key players in the business, revise and ask key players to review the plans a second time before presenting them to the board of directors/owners and employees.

    Step 4: Meet With Employees
    Have a company meeting, admit that there are things wrong with the business, and discuss how management plans to fix it. Provide employees with a copy of the company business plan and ask for their input. This step demonstrates that careful consideration has been given to the development of the business.

    Step 5: Meet With Customers
    Rumours of the business’s distress and downturn are reported around the business community. Key customers are becoming nervous and some are even looking for new suppliers. Don’t stick your head in the sand. Inform your customers about your situation and tell them how you plan to correct it. Be reassuring, but not deceitful.

    Step 6: Meet With Company Suppliers
    Company vendors get very nervous when they hear “on the street” that one of their customers is having trouble. Develop a prepared statement outlining the problems and how you plan to deal with them. You will receive plenty of concerned telephone calls. Respond quickly and considerately to all of them.

    Step 7: Contact Tax Authorities
    If you can’t pay your taxes, notify the authorities. Tax authorities will work with you, but don’t be deceitful or fraudulent. You’ll be on much better terms with them if they understand your situation, rather than trying to avoid your obligation.

    Step 8: Contact Your Bank
    If you have loans or a line of credit, call—don’t write—your CRM and tell them you need to meet in person. Give them the bad news followed by your plan of action. Appear confident, encouraging and self-assured.

    Step 9: Keep Only Employees Who Are Essential To The Business
    Figure out which employees you can let go without damaging your business. Nobody likes to let people go, but for the business to survive you want to keep only people who are essential to the business’s survival.

    Step 10: Cut Unnecessary Costs
    Make a list of all your expenses and eliminate what you don’t need. You need to buy time in order to fix your problems, and cutting expenses is a good way to buy “financial” time.
    Vincent Marino
    Maximising the sales value of your business!

    Business 24-Seven |MyBlog Twitter |facebook |Phat feesh & chips






  2. #2
    Site Caretaker Dave A's Avatar
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    A great article! Thanks, Vincent.
    Quote Originally Posted by Vincent View Post
    If you can’t pay your taxes, notify the authorities. Tax authorities will work with you, but don’t be deceitful or fraudulent.
    Vincent - have you any idea just how much the tax authorities will "work with you." I'm always mindful that when getting behind on your taxes, generally the interest and penalties are not tax deductible expenses.
    The trouble with opportunity is it normally comes dressed up as work.

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    Silver Member Vincent's Avatar
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    Hi Dave,
    have you any idea just how much the tax authorities will "work with you."
    Recently I presented a seminar on business turnaround and in the audience were three people from SARS, which I found interesting. During the seminar I asked them what their interest was in business turnaround. They said they wanted to understand why business fails and was there a roll they (SARS) could play in helping businesses. I doubt that every SARS department thought like those three gentlemen.

    A few months ago I received a telephone call from a business that owed +R500,000 in back taxes & penalties and each month this amount got bigger. To add to their woes their overdraft was maxed out, they were having cashflow problem, etc. To cut a long story short. After 3 months of talking to the taxman, meeting in their office, negotiating, and writing endless letters, the taxman reduced the interest and withdrew the penalties. In the fourth month when their tax assessment arrived, the taxman owed the company R74,000!

    The point I'm trying to make is that if you can spend time at the tax office and not only write letters and handle the bureaucracy and staff attitude of "it's not my department, job," then you can succeed.
    Vincent Marino
    Maximising the sales value of your business!

    Business 24-Seven |MyBlog Twitter |facebook |Phat feesh & chips






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    Site Caretaker Dave A's Avatar
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    If they ended up being owed a refund, somebody must have stuffed up in terms of filing returns in the first place - which doesn't surprise me, actually. I think when a company is in trouble quite often the attention to detail in the admin goes backwards most of all because it isn't seen as an income generating actvity.

    A big mistake, of course, but unsurprising.
    The trouble with opportunity is it normally comes dressed up as work.

  5. #5
    Silver Member Vincent's Avatar
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    Quote Originally Posted by Dave A View Post
    somebody must have stuffed up in terms of filing returns in the first place
    I probably oversimplified the whole matter, but you're right about stuffing up - the person who was to have filed the returns did so as Caesar's over a few years! there were 21 short payments over a period of three 'n bit years.
    The refund came about because the new person paid in a little extra, the penalties were removed, and interest recalculated, which reduced the total debt by about 46%.

    I think when a company is in trouble quite often the attention to detail in the admin goes backwards most of all because it isn't seen as an income generating activity.
    Can't agree with you more.
    Vincent Marino
    Maximising the sales value of your business!

    Business 24-Seven |MyBlog Twitter |facebook |Phat feesh & chips






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