The plan included improvements to the customer experience, vendor relationships, cutting costs and growing sales.
His plan worked and Best Buy was able to re-stabilize and return to profitability within a few years.
Developing a structured, well-planned and methodical corporate turnaround strategy like Joly’s takes time, investment and the right people to make it happen.
In order to save the company, you first need to decide if it has all the components to succeed.
Every successful company has 3 things in common:
- Strong roots
Can it be revived?
Not all businesses can be saved.
A company worth the time and energy for a successful turnaround must have at least three basic components:
1. Strong roots
A business with a good history and reliable employees has a greater chance of surviving than one without.
However, even companies with these requirements don’t always succeed. Sometimes the problem lies elsewhere.
Funding is one of the most important aspects of a successful turnaround.
According to the 2015/2016 Global Entrepreneurship Report, over half of all businesses fail due to lack of funding.
A business needs to have enough cash flow to finance a turnaround and get back on its feet, meaning that companies should seek help before they hit zero.
Finally, no business can bounce back without the necessary skills, knowledge and resources it takes to run a successful business.
Companies need to have access to all of these in order to survive.
Identify the problem
The next step is figuring out why the company is struggling. Seek to identify the who, what, when, where and why.
This requires you to decide whether this organization needs a retrenchment strategy, a recovery strategy or both.
Retrenchment strategies deal with internal causes like operations to reduce cost, while recovery strategies focus on external causes, like a company’s competition.
The sooner you identify what doesn’t work, the sooner you can discover what will.
Internal causes could include:
- Executive management
- Poor business decisions
- Remaining static in a dynamic industry
External causes could include:
- Market demand
- The current state of the economy
- Supply prices
Do some damage control
Once the problem areas have been identified and you’ve decided which strategy to implement, it may be time to do some damage control before implementing your plan to save the company.
This usually involves conserving the liquidity of funds or downsizing.
During this step, it’s important to monitor the situation and get it under control before it gets worse.
So, once you figure out the problem, nip it in the bud before it grows.
There’s a good chance that an inconsistency in a company’s long-term strategy is the reason for its demise.
If this is the case, you’ll need to redefine a few key areas:
These things should work together to form a cohesive, well-planned company strategy that helps the organization achieve its goals.
Now, you can begin to develop your plan for a successful turnaround based on the information you’ve gathered about the company.
Although not every company can achieve success, it’s important to remember that every failure is a learning opportunity.
As Thomas Edison once said, “I have not failed. I’ve just found 10,000 ways that won’t work.”