- Stabilize Your Environment – simply put, maintain positive cash balances at all times. Sign for all obligations and sign all checks.
- Discipline – instill the discipline to act, target results and be accountable with NO exceptions. Instilling superior discipline teaches others to act as you would act.
- What is causing the problem – sales declining? Profit margins eroding? Expenses increasing? Losing key customers? Here you need an adequate financial reporting system to make the thorough comparative analysis to diagnose the problem and begin to formulate solutions. The use of financial ratios to look at performance for the last 3 years is critical.
- Get back to profitable lines – whether product or services, rebuild and restructure around the most profitable, albeit smaller, lines of business. It is more important to get smaller and profitable than get bigger at this stage.
- Prepare a turnaround plan – be practical, conservative and realistic. You will need to convince the bank and your creditors you will make it. Your plan has a realistic chance of succeeding. Your narrative should be detailed and in-depth and cover sales, operations, cost savings and how they will get paid, all backed up with comprehensive financial and cash flow projections.
- Negotiate – you will most likely need your bank and creditors to restructure their debt. This will take time and your personal attention. Do NOT make a deal that puts you and the company under undue cash flow stress.
- Execute, execute, execute – now is the time to make good on all the hard work you have done to this point to save the business. The focus of execution is disciplined decision making, results oriented thinking and tireless accountability to the mission.
Once you have gotten the business back on its feet you have one last decision to make – grow it or sell it. Your choice.