While not all companies can return from a crisis, most can be saved with the right strategy and people working together.
First, in order to be able to lead a company out of a crisis, the company must have three things:
- 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.
- Short-term financing. 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 a 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.
- Savvy. Finally, no business can bounce back without the necessary skills, knowledge, and resources it takes to run a successful business.
After making sure the company has access to all of these, the following measures can be taken to get the business back on the right track:
Take a step back
Sometimes the best way to get a holistic view of what’s going on is to take a few steps back.
Look at the situation from an outsider’s perspective and think about what needs fixing.
Then, 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.
Don’t be afraid to criticize your plan
If your plan isn’t working, scrap it and come up with a different one.
There’s no shame in admitting that your plan is flawed.
Expect more from your Board of Directors
Joan Garry, a nonprofit consultant, believes that behind every healthy organization is a healthy board: “Shared leadership with an invested thought partner with leadership skills can cut so many challenges off at the pass and propel your organization toward the fulfillment of your mission more quickly, more clearly, and more strategically.”
Your Board of Directors should be passionate, engaged, collaborative and held accountable for their role in the company’s success.
Some basic responsibilities of the Board of Directors are:
- Appointing the CEO
- Approving major policies
- Making major decisions
- Overseeing management performance
- Serving as an external advocate
Focus on finances
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 finances.
You need to recognize an issue before it becomes the death of your company, which means keeping a close eye on your balance sheets and cutting costs when necessary.
5. Build up the leadership team
People are what build a company, not CEOs, but a good CEO develops and leads their people down the path of success.
According to Fast Company, one of the biggest drivers of high turnover is the belief that there are better professional development opportunities further afield.
Successful leaders have the ability to inspire loyalty in their employees and reduce turnover by investing in their employees, developing their skills and providing them with a healthy, collaborative work environment.
Companies with reliable employees and a savvy leadership team have a much better chance of surviving than those without.
6. Trim the fat
People are what make a company great, so if the people aren’t great, the company will suffer.
The company may need to downsize in order to save money and weed out the good employees from the great ones.
7. Re-think your incentive plans
In order to attract the best talent and re-energize your employees, you may need to beef up your incentive plans.
Try setting specific goals every quarter on an all-or-nothing basis.
8. Benchmark against other top companies in your industry
Follow the old saying: keep your friends close and your enemies closer.
You should constantly be scoping out the competition and paying attention to how successful companies operate.
While not every company can be saved, following these tips will ensure you’re leading the company out of a crisis, instead of into one.