The recent financial crisis has left many companies reeling. While the overall market starts to show some signs of improvement, the situation is still quite challenging among companies further down in the value chain. Our experiences in the SME sector indicate that these times put a heavy toll on management, who need to change gears rapidly when the market effects hit them.
Working side-by-side with CEOs, CFOs and Board members of our clients, we have developed a practical and holistic approach for radical turnarounds where tweaking a single lever is not enough. The approach includes identifying, documenting and quantifying the tasks that allow cost and working capital reductions, prioritizing the alternatives into a clear action plan with the necessary buy-in, introducing the necessary financial control and follow-up processes, and finding sources for funding that sets the company on a new path. A turnaround puts a heavy emotional toll on all parties involved with the company, and thus the approach needs to include all stakeholders and ensure communication is open and immediate. This is also accounted for in the approach we have used.
Using a systematic approach has clear benefits. While it is easy to fall into a vicious cycle when hit by a downturn, applying focused decision making and execution helps to turn the situation around and start a virtuous cycle to get back on track.