What is a Turnaround Strategy?
Turnaround Strategy” refers to how companies work with struggling businesses to turn things around. This can be done by way of increasing production levels, decreasing costs, or both; what matters most is that these struggling businesses are given small doses of care to see them through their difficulties. The idea of turnaround strategy is different from turnaround management. Companies with great turnaround strategies, also have years of experience in turnaround management. Such companies would have multiple years of data that it could reel out for review, therefore, the job of an expert would be relatively easy since the company has all information at hand, ruling out the need to look through old documents.
The companies that take up turnaround strategies are usually already renowned in their particular niche. As a result, if they are stuck or having trouble with their current business, these companies can take advantage of this situation by turning it around rapidly. This is why turnaround strategy is considered to be a kind of strategy that brings great benefits to the company.
The management of these companies can come up with very unique ways of turning things around for their struggling business. For example, the company may choose directions to take that are novel, unique or previously untried. This gives struggling businesses a chance to get out of their current slump situation and improve their business outlook.
Some Common Turnaround Strategies
Expand operations in overseas markets. Same products will not always work equally well in every country, so it is important for companies to look beyond their own country when they decide on the next step in the turnaround process.
Merging with companies in other businesses. When companies are stuck because of one particular business, they could merge their company with another similar company so that it can gain strength in its other businesses. For example, if a company’s operations are mostly under the green umbrella of operations, this company could merge with others so that it can also profit from the other colors.
Cutting down on excess staff and selling off non-performing assets. This is usually the first step that turnaround companies take to clear themselves of any extra baggage while at the same time freeing up cash reserves to perform better in the business.
Direct hiring of new personnel. With the company running business improvement activities, it may decide to take on new staff that are more competent than the company has used during its current difficulties. This step can also be taken by companies who are having issues because of changes in the market. By getting rid of under-performing employees will allow the company to focus on growing areas of their business.
Reducing costs or revenues. This strategy is often chosen by companies who are having both financial and production problems due to their bad management techniques. The company may choose to reduce its expenses without closing down the business since this will also help it to cut down on costs.
Adding a completely new product line. When a business is in a slump, the company may want to add a new product line for it so that it will have something else to present when it works on its plans of becoming profitable again. They can also add products from other industries which can be used in their industry even if they are not usually associated with it. This is because businesses which are doing poorly need something new in order to get them out of their rut and give them the kind of boost that they need in order to return back to their productive ways.
Replacing the management. A company may choose to bring in new management in order to improve its profitability. This can be done when the present management is unable to think outside the box and help the company escape its current slump.
Implementing a well thought through marketing strategy. Businesses are only as good as their marketing strategies are. The turnaround strategy usually entails making sure that there are objectives in place for any marketing strategy which will be implemented by the company. This will make it easier for the company to grow since there is a focus on improving specific points of it rather than leaving everything up in air in order to eventually grow without being able to pinpoint what went wrong with its business in the first place.
Introducing new products. When a company is doing poorly, it may want to introduce new products for them so that it can improve its market share which in turn will lead to greater production. This may also be done when the company has not expanded into new territories or merged with another company that it could learn from in order to improve its current standing.
Converting existing products into other uses. Sometimes, companies may need to come up with creative ways of using their existing products rather than selling them off as planned. This can be done when the company is trying to get back to its previous status of doing well in the industry. This would mean that the company’s old products would end up having new uses that can bring it back into its more prosperous business position.
Contracting out of non-essential services. This may be done when companies are not able to get back to their previous level of production due to factors outside their control. This would mean that the company’s non-essential employees shall be let go or contract out in order for them not to suffer losses due to this business downturn.
While the above are some ways companies can get back to their previous level of business profit, it is only through having a well thought out turnaround strategy that considers the peculiarities of the business that an effective Turnaround Strategy can be developed. Fintalent’s Consultants and Freelance Strategists can help develop the most appropriate Turnaround Strategy that can help a company get back to its former size and profit.
