"I don't have time to create a turnaround plan." This is a comment I hear frequently from harried entrepreneurs who are trying to save their failing business. In most cases these entrepreneurs have constructed regular business plans for their fledgling businesses, so they know how much time a turnaround plan might take. I sympathize with these folks because I have been in that very position on several occasions.
Having taken over businesses on the brink of bankruptcy, the last thing I ever wanted to do was take the time to prepare a formal business turnaround plan. Planning—yes. A formal business plan—no. However, there are many people who are essential to the successful turnaround of a business-in-crisis, e.g., investors, bankers, suppliers, special customers, and the like, who demand to see a written plan for your business. (Employees need to be involved in turnaround "planning," but a formal plan is not as important to them as actual involvement in the planning.)
So, how do we go about constructing a written turnaround plan for your failing business? Here are the basic elements I would recommend including in this type of business plan:
- Make the document look semi-formal. You do not need anything fancy—just neatly prepared and highly readable. The entire thing can be prepared on your laptop in Word/Excel format (or similar software).
- On your title page, include the title of the document, the name of your business, and all contact information—your name, address, phone number, email address, etc. Most people who read this plan will already know all about you, but include this information anyway as a courtesy. Courtesy goes a long way when your business is trying to climb out of a crisis.
- On the first inside page, provide a short narrative of the history of the business; its highlights and accomplishments; its growth (if it warrants highlighting); what happened to drive your business into crisis; what the current impact of the crisis is on your business; how you intend to proceed to turn the business around; and what you expect the ultimate results to be. This portion of the turnaround plan should not be more than two (2) pages long. Any longer and it will not be read.
- The next page should be a one-page proforma of what you expect the operation of your business will be. This should be for the next 90 days ONLY. (When your business is in crisis, any plan that goes out further than 90 days is useless information.)
- The next page should be a summary of steps you are NOW taking to stop the financial hemorrhaging of your business and bring your cash to equilibrium (cash in equals cash out). This is often a before-and-after list of positions that you will be eliminating.
- The last item in your main document will be a short summary page of what you expect the results to be from the changes you are making, as well as the next steps you have planned to your turnaround.
- The final section will be the Appendix, where you will include P&L information for the last two good years of operation, as well as current P&L information up to now. It is important to show that your business has made profits in the past, as well as when the downturn actually started.
NOTE: Your turnaround plan will be very sketchy at this point, as you obviously will not yet have determined all the steps you will be taking in your turnaround process…but you will be telling people that you have already made some progress and that you are planning additional changes in operation to resolve your crisis. This plan should be available no more than five (5) days after you have determined that you definitely have a real crisis to resolve.
You should revise this plan at least every 30 days for the ensuing 90 day period, at least until your cash flow is under control and running positive.
You can download a sample Turnaround Plan, in pdf format, from my book "Be Your Own Turnaround Manager." To access this sample document, click here.
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In your planning you have undoubtedly presented some major changes to your organization, so the next report you should read presents some "Organization Tips" on how you might want to organize your business from this point forward. You can access this report here.
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