A good business turnaround requires you to stabilize your
environment; without this step, your business will likely remain
unprofitable. Maintaining both a positive cash balance and
abiding by a smart budget is vital.
Maintain a Positive Cash Balance
The best way to maintain a positive cash balance is by spending
no more than what you start with at the beginning of the week.
In other words, if you start the week with $10,000 and collect an
additional $5,000 by the Friday of that week, then you should not
spend more than the original $10,000. This budget will keep
your company alive as you will not have negative equity after the
week ends. Managing your cash is the single most important
facet of building a stable environment.
Budgets and Forecasts
Following a smart budget is absolutely integral to a good
business turnaround, but there are other methods used to build a
stable environment. A good business knows how to make proper
forecasts. You must be able to estimate sales by talking to
customers about anticipated future transactions. You should
evaluate your staffing, inventory and supply orders to ensure
they are worth your investment. A good business turnaround also
depends on your looking for inventory that is not on the books or
otherwise hidden in your business.
Evaluate the Competition
In stabilizing one's environment, which again is absolutely
essential to a strong business turnaround, you must look at
similar businesses that you can model after or even purchase
should it be in your best interests. Not only should you
monitor your weaker competitors, but your sales team must also
look into the possibility of wooing their best business
partners, customers, and even employees, if there is an
advantage in doing so.
So, a good business turnaround may depend on your ability to
recognize an opportunity to acquire other, less
healthy competitors should it be economically advisable.
Having a strong client base and weak competition are two
ingredients for creating a stable environment, and in doing so
you will establish a positive cash balance. Otherwise, your
business may face the kind of serious debt from which it is
impossible to recover.
Monitor your Staff
There are other means of forming a stable environment within your
company. You must closely monitor your staff and ensure they
are doing their job. If, for example, you have a controller who
is inefficient or careless with cash management, you need to
respond. A controller is supposed to control the cash, and must
share some of the responsibility for an unstable environment.
Business turnarounds are only as effective as the people who
utilize it. If you want your company to succeed, you must be
prepared to let go of individuals who either are not doing their
job or doing it poorly. You must also maintain good communication
with your employees on a regular basis. This builds trust and
loyalty- assets that will strengthen and unify your company
culture.
Positive cash management involves every facet of your business.
To achieve a business turnaround, it is essential to take into
account your budget and spending, as well have accurate forecasts
to work with. Your knowledge of your competitors and good staff
management also contribute to your ability to create positive
cash flow.
Thayne Carper spent 4 years of college competing in student
business plan competitions. He's never won a business plan
competition and was dropped from his college's entrepreneurial
program for lacking potential. Today, he is one of the youngest
published experts on the topic of business turnarounds and cost
reduction. Visit his website lower supply costs up to 30% for a
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