Solutions to turn around a company / subsidiary in difficulty
In this article: the 4 major solutions for a struggling company: do violence to yourself and accept the state of the art, get organized, get the teams on board, increase profitability.
Summary
1 - To have a trigger: to do violence to yourself, to accept that you are in crisis
Even when their business is doing badly, business owners are positive, moving forward, and telling themselves that their worries are temporary, that they will work it out (on their own), that it will get better.
The reality, as with fixing any problem, is to “get a shock” “panic” to realize that we need to ‘really’ act, and change.
The first action is toaccept that your company is in trouble, and may be worse off than you think.
The awareness of the magnitude of the problem allows us to address it.
You also have to accept that you are (partly) responsible: stop the excuses “the market is difficult”, “the period is complicated”, “we lost such and such a market that’s why it’s going badly” … because even if it’s true, it doesn’t help.
You have to be able to say to yourself: there are no excuses: the company is in difficulty, it’s going very badly. We have to change: we are managing a crisis.
The 3 important human qualities to leave are:
- Be courageous, resist stress
- Acknowledging mistakes, going back on decisions you have made
- Explain what you are going to do, and do it
2- Company in difficulty: it is necessary to get organized
The solution to turn around a subsidiary or a company in financial difficulty is based on the following organizational points:
- Try to reduce and spread out debts to try to survive (dealing with banks, suppliers, subcontractors, taxes, URSSAF etc). To do this: tell the truth, ask for time, and express a willingness to pay in any case.
- Make a plan: establish a contingency plan to optimize your cash flow, with immediate measures. The plan must be for 1 year detailing the objectives, actions, and deadlines
- Translate the plan into a costed business plan
- Agree to consider bringing in an expert: whose job is to lead companies to growth. Its cost is quickly repaid because it is there to make money for the company. Beyond his support, which can be precious, he brings an outside view, and allows the company to regain margin and profits.
3- Being positive, reassuring, and getting the teams on board is one of the solutions for getting a company in trouble back on its feet:
When a company is in trouble, leaders don’t always realize how much their teams see, feel, talk, and panic. Moreover, employees need to believe that the company can succeed in order to perform.
It is a matter of being transparent, of reporting the crisis/difficulty, but of reassuring (!), of explaining that success is largely possible.
First of all,it is important to listen to the teams: to free up the floor, to listen to those who speak (and not just one or two people who might give a false view of the truth). Take the admonitions without being in justification or aggression: just listen and take the remarks into account.
Secondly, the action will be to boost employee morale, as they are obviously the key to growth.
For example, ‘ban’ employee emails in the evening so they can enjoy their personal lives. It makes them feel more energetic and optimistic in the morning, it raises employee morale and increases productivity in the long run.
Have confidence in your teams. Make decisions transparent to them, consider them regardless of their hierarchical level. Employees are no fools, and can sense when there is a lack of transparency.
If they feel that there is transparency: they feel safe, and are boosted. Employees are eager to work for a common company project and not just for themselves!
Other leads :
- let employees be a force of proposal and have initiatives.
- Do not neglect the power of small gestures: a thank you, a compliment, can motivate all the more!
- offer them a medium and long-term vision.
4- Increase the company's profitability
When the subsidiary or the company is in difficulty, the profitability of the company must be increased. The items on which to act are :
- Reduce costs:
- review each cost (even small ones), remove it if unnecessary, or optimize it
- renegotiate all expense items
- buy cheaper
- be permanently at the economy (up to electricity, used spaces, price of tools…)
- Increase turnover:
- study the pricing policy
- refocus on its core business (if it is still relevant), and rely on the teams in place
- increase some rates
- see which products/services bring in the most money, look for a promising sector
- study which types of customers bring in the most, can we sell them more?
- Are the products/services still competitive?
- find new clients, look for new opportunities in the industry
- Increase productivity
- optimize, reduce processes
- define KPIs
- measure operational efficiency: to do this, communicate the objectives and the means of measurement
- encourage employees
- Reorganize, restructure if necessary: aim for simplicity and accountability
- listen to the teams on the subject
- study the existing organization, see what optimizations need to be made
MOMEN assists companies in difficulty: interim management helps to restore profitability and growth (link “contact us below”)