Plan to Turn Your Company Around in 90 Days: How to restore positive Cash Flow and Profitability PDF
Preview Plan to Turn Your Company Around in 90 Days: How to restore positive Cash Flow and Profitability
For your convenience Apress has placed some of the front matter material after the index. Please use the Bookmarks and Contents at a Glance links to access them. Contents About the Author ix Acknowledgments xi Introduction xiii Part I: Managing and Preserving Cash Flow 1 Chapter 1: How to Manage Cash Flow Better 3 Chapter 2: How to Manage Accounts Payables Better 21 Chapter 3: How to Manage Accounts Receivables Better 31 Part II: Improving Operations Management 41 Chapter 4: How to Manage Employee Productivity Better 43 Chapter 5: How to Manage Technology, Facilities, and Manufacturing Better 63 Chapter 6: How to Manage Process Flows Better 77 Part III: Increasing Marketing and Sales Efficiency 95 Chapter 7: How to Understand Your Customers, Competitors, and Key Trends Better 97 Chapter 8: How to Develop a More Effective Marketing Strategy 115 Chapter 9: How to Develop a More Effective Sales Strategy 133 Part IV: Managing from the Top Down 149 Chapter 10: How to Manage Investors and the Board of Directors Better 151 Chapter 11: How to Hire and Manage Your Turnaround Consultant 163 Chapter 12: How to Manage Yourself and Your Staff Better 175 Appendix: Sample Consulting Proposal 189 Index 197 Introduction Reversing Business Insanity Your company is in trouble—or soon will be. sales may be decreasing, it’s getting harder and harder to eke out a profit, and you may suspect you’ve already started the death spiral that causes so many companies to crash and burn. Based on my experience as an entrepreneur, as a consultant advising companies about strategic planning, and as an interim chief executive officer (CEo) when a rapid turnaround is required, i suspect that you and your fellow executives are committed to achieving the firm’s vision and mission but are extremely frustrated, unsure of what to do, and may be burned out. Employee morale is probably dipping along with the company’s sales. in addition, the firms’ debt and payables are most likely increasing. no matter how unique your product or service, this trend is choking your firm’s chance of success and is simply unsustainable. if you are old enough to be reading this book, you probably have read and/or heard that one definition of insanity is doing the same thing over and over again and expecting different results. many of us have not only heard this definition, but have been susceptible to it in our personal lives as well as in business. i suspect that the reason you are reading this book is because your company is suffering from business insanity. this book is intended to help your firm by doing what a good friend once advised me: If you want to climb out of a hole, stop digging. as counterintuitive as it may seem—and as difficult as it may be for you to hear—the company culture must change very quickly for your firm to survive. What worked in the past is simply not working today and certainly will not be effective tomorrow. Chances are that your firm’s culture has been product or service oriented, personality driven, and impulsive—characteristics viewed by all, proudly, as creative—which may xiv Introduction have worked during the startup and growth phases, but must now change. the faster the firm becomes customer centric, process oriented, and metric centric, the faster it will start to reverse the negative trends it is experiencing. Chances are that you and your managers do not need to work any harder, you need to work smarter. the first step in doing this is to conduct an objective assessment of what is working and what is not. the firm did not get into its current predicament overnight, and it is not going to get out of it overnight, either. However, within 90 days or less, you can develop a plan to turn your company around by evaluating every aspect of your business using the tools and principles discussed in following chapters. Here’s what not to do: panic or conduct wholesale firings, like so many private equity firms and venture capitalists do when faced with turning around a struggling company. Firing the CEo and senior managers may feel good, but often it is not the most effective approach to solving your problems. Even if it is, new managers still need to conduct an extensive audit so they do not become vulnerable to reinventing the wheel and/ or making the same mistakes as previous management. Besides, if you are a CEo or part of senior management or owner of a family business, cleaning house of executive management is not a viable option. are you going to fire yourself? this book is intended to help owners, managers, accountants, bankers, consultants, entrepreneurs, investors, and lawyers help get a company back on track as quickly and cost-effectively as possible. and this can and does happen. since earning my mBa from the Wharton school more than 20 years ago, i have been involved directly with a number of startups and dozens of companies that were facing the very problems i review in this book. most of the issues i cover were not learned at Wharton; rather, i learned them from the school of Hard Knocks. i have found myself in many of the situations discussed in this book. at the time, i was not aware of outside resources that could have helped me find solutions faster. this book provides a no-nonsense, straightforward approach to solving everyday business problems for a company that, for whatever reason, has lost its momentum and finds itself digging out of a deep hole. road map of the Book Plan to Turn Your Company Around in 90 Days is divided into four parts. there is a logical sequence to the parts and their chapters. However, each part and each chapter can stand on its own merit and thus does not need to be read in sequence for you to gain valuable insights. Introduction xv Part i focuses on managing and preserving cash flow. this is the most important section for any CEo and/or senior-level manager to understand. if you don’t understand everything in this section, read it a second time. if you need to, discuss the issues with a more financially oriented advisor or friend. Having a better grasp of cash flow management is critical to turning your company around. it will also help you understand the context of the subsequent parts and chapters. Part i is comprised of three chapters. Chapter 1, How to manage Cash Flow Better, focuses on why managing cash flow should be the number one priority of the firm. Chapter 2, How to manage accounts Payables Better, focuses on tips to manage your accounts payable. Chapter 3, How to manage accounts receivables Better, focuses on tips for managing accounts receivables. Part ii examines improving operations management. it is critical that you determine where, in the firm, you are getting value for your expenditures and where you are wasting money. Your management team is going to have to develop a discipline of understanding which expenditures are necessary to run your business, as opposed to the nice-to-haves, during the initial phases of turning the company around. the latter point is especially important given your limited working capital. Part ii, improving operations management, is comprised of three chapters. Chapter 4, How to manage Employee Productivity Better, focuses on managing employee productivity by, among other things, improving internal communications. Chapter 5, How to manage technology, Facilities, and manufacturing Better, examines leveraging the assets you need and reducing the liabilities associated with them, as well as getting rid of what your firm does not need. Chapter 6, How to manage Process Flows Better, looks at how to manage your core business operations more effectively to maximize your overall productivity and margins. Part iii is called increasing marketing and sales Efficiency, which is the one area of the business in which it is very easy to become susceptible to third-party marketers and advertisers who get paid to sell you programs and who often have no clue and, sometimes, no interest in whether you really need their services. marketing and sales is especially difficult for consumer-oriented businesses that are dependent on customers who have lots of other choices for purchasing the same products and services, as well as other unrelated companies vying for the same precious, disposable wallet share given the current lingering recession. xvi Introduction Part iii is comprised of comprised of three chapters. Chapter 7, How to understand Your Customers, Competitors, and Key trends Better, looks at how understanding your clients, competitors, and industry trends will enable your firm to position itself more effectively in the marketplace. Chapter 8, How to develop a more Effective marketing strategy, examines why developing a solid marketing plan should occur before developing a sales plan. Chapter 9, How to develop a more Effective sales strategy, focuses on developing a sales strategy along with a motivated, trained, and accountable sales team. Part iV, managing from the top down, explores how to manage your investors and the board of directors, yourself and your staff, and an outside consultant. this is an area in which CEos in trouble tend to put the least amount of effort. the main emphasis in this part is on the importance of transparency and maintaining ongoing communication with those stakeholders who ultimately may be your greatest asset in turning around your firm. Part iV is comprised of three chapters. Chapter 10, How to manage investors and the Board of directors Better, looks at how to reach out to your investors and board members, and the importance of leveraging their relevant expertise and contacts to help your company. Chapter 11, How to Hire and manage Your turnaround Consultant, examines the processes of finding, engaging, and managing a consultant to help you turn your company around. Chapter 12, How to manage Yourself and Your staff Better, focuses on helping you do some things for yourself and your staff that might make all of you more effective. turnarounds: simple, But not Easy Every company’s financial and operational situation, culture, and dynamics are different. However, the fundamentals of operating any business and the problems to which many companies are vulnerable are not that unique. this entire book is based on firsthand experience of helping different types of companies work through very similar problems. First, you need to get your finances in order. this does not mean you have to solve all your financial problems; it means you have to understand how big your problem is and where and why you are losing money. second, you need to get your operations in order. third, you need to improve your marketing and sales. understanding which products and/or services sell the best to whom, and which ones make the best margins is critical before planning marketing and sales efforts. Fourth, and last, you need to manage yourself, your fellow executives and staff, your board, your investors, and Introduction xvii your consultants better. this old cliché is trite but true: the most valuable resource your firm has is people. spending the appropriate time building your team and leveraging its strengths is critical to getting your company back on track. together, these steps will allow you to make your way out of your hole. Plan to Turn Your Company Around in 90 Days is intended to be a lifeline for you and your colleagues. i hope that many of the recommendations made throughout the following chapters help get your company back on track as soon as possible. Feel free to e-mail me with any questions ([email protected]). Good luck! P A R T I Managing and Preserving Cash Flow C H A P T E R 1 How to Manage Cash Flow Better Your Number One Priority It’s important to point out at the onset of this book that you shouldn’t worry about your firm’s original vision or how big your company is going to get someday. Your business is in survival mode. Preserving cash must be your top priority, along with fixing the systemic problems that your company faces. In addition, you should focus on how to make your business profitable. As a result, your company may have to downsize its staff, locations, opera- tions, and marketing campaigns to obtain gross profitability. Simply selling more products or services that are not profitable only leads to the faster demise of your firm. If you can’t obtain gross profitability, you have a flawed business model that needs dissecting as quickly as possible. If you do have a profitable business model but are unable to reach the company’s full potential, there are various options available to you to get the firm back on track. We discuss these choices throughout this book. If people try to convince you that all you need to do is just grow your way out of the hole the firm is in, chances are they are either not aware of the systemic problems your business is facing or they have never been involved with a company that has the same types of problems you have. It takes working capital to grow a business, whether you are hiring new sales representatives, purchasing advertising, or purchasing inventory. If you are out of cash, you simply cannot do these things. You must play a different hand as quickly as possible; you don’t have any more time to waste.
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