5 essential tips for your small business turnaround plan

Today’s sponsored post comes from HW Fisher Chartered Accountants who specialise in small business turnaround:

Your small business has been running smoothly for a couple of years. Things seem to be going well, and then you hit a few snags and before you know it the situation is looking decidedly dicey.

Fortunately with some discipline and hard work it is possible to execute a turnaround and get things back on an even keel again.

It might mean some hard decisions need to be made, but remember the total failure of your business will be much harder, so make sure when the time comes you’re prepared to act decisively.

Here are five essential tips to help your small business turnaround plan be a success.

1. Analyse. An effective small business turnaround relies on accurate information and a thorough understanding of what is causing the problem. Accept that there are problems and then take steps to isolate it.

Ask for a cash flow forecast from your accountant as this will help you estimate how much time you have if the problem isn’t addressed. Then analyse your last few months of accounts. Is it a cash flow issue? Are you haemorrhaging cash somewhere? Or is the current business model no longer profitable?

You won’t know until you ask some difficult questions, but only then can you being to affect change.

2. Improve cash flow. Nothing kills a business quicker than bad cash flow. If after your investigations you and your financial team see that the business is profitable but you have a cash flow issue, then you need to rectify the issues surrounding it.

It’s vital to talk to creditors and explain the situation. Many creditors will be understanding, especially if you explain the steps you’re taking to correct matters. After all they don’t want to see the money you owe disappear in a liquidation.

Once you’ve got some breathing space get on top of credit control. If necessary outsource work to a specialist who can chase late payers every day. Of course if your business is based on negative cash flow, that is you have to meet most of your costs before clients are due to pay, then you need to explore other options with your accountants.

3. Focus on profit. If the issue is deeper than cash flow, and your problem is an issue of profitability you need to be able to step back and see if the issue is. Is your sector suffering a squeeze or is it a problem with your company?

If it’s a sector-wide issue then you simply have to cut costs, batten down the hatches and survive until things pick up. If there is an issue within your company, and your competitors appear to be fine, then work out the issue and rectify it.

4. Save the best. If you employ staff, and decide redundancies have to be made, make them as objectively as you can. You need to retain the staff that will help your business through recovery and back into profitability.

Keep staff who are not only great at their job, but also have a positive and enthusiastic work ethic. If changes are to be made, some of which may be difficult in the short term, then you don’t want staff that are negative and resistant to change.

5. Look to the long term. Take this time to assess your business in light of the changes you will be undertaking. Is the product or service you provide a commodity and subject to market changes, or is it a value added item, something that you can have more control over the pricing of? Understanding this will give you better insight into how to work moving forward.

This article was provided by HW Fisher Chartered Accountants who specialise in small business turnaround services.