Are you in charge of a troubled organization? Is your organization a small closely-held business…or a much larger company? Is it a non-profit organization? Or, is it a department within the company for whom you work? Your troubled organization might be your family, or simply your own life, or personal brand. Regardless of your answer, the broad concepts I’m about to share can be directly applied to your specific situation. However, my remarks will be made in the context of a small business scenario.
Acknowledge Your Troubles
Any business or other organization will face a myriad of problems and struggles on an ongoing basis. That is a fact of life. It’s the responsibility of management to address and resolve these troubles as they arise. Over time, if enough issues are ignored by complacent or incompetent leaders and managers, trouble will begin to brew within the organization. Left unidentified or unresolved, these problems will worsen, oftentimes to a point of severe crisis. Denial and rationalization of the increasing troubles is a common response by business leaders; this is a recipe for disaster. Astute executives and managers, on the other hand, will proactively look for signs of trouble. I addressed this in an earlier blog post entitled, “Early-Warning Signs of a Troubled Company.” Once an honest, enterprise-wide appraisal of the nature and severity of the organization’s problems has been completed, it’s critical for the business leader to fully and accurately acknowledge the situation as it exists. Now is not the time to put your head in the sand and pretend that things are just fine.
Minimize the “Paralysis of Analysis” Period
After you’ve accepted the reality of your troubles, the tendency is to over-analyze the situation and over-complicate things, especially if they are severe. Wanting to develop the absolute perfect profit improvement plan or turnaround strategy, we can devote too much time thinking and stressing about the problems. This can paralyze us and seriously impede our ability to make timely decisions. Yes, we need to carefully assess the situation and develop detailed and prudent plans, but time can be of critical essence at this early stage. Consequently, there are several distinct steps to follow when you recognize your organization is in trouble. For example, take action early and don’t waste time; seek competent legal help; communicate with creditors and employees; and stop the cash bleeding. Each of these recommended actions are described in a Forensic Accounting Today blog post entitled, “Tips for the Troubled Company.”
Evaluate Your Options…and Pick One!
As you’re taking the initial steps suggested in the above paragraph, it’s important for you to identify the basic courses of action, or options, from which you can choose. You’ll probably want to take advantage of outside legal, financial, and other advisors to help you in this process, especially if your organization has reached the mid-to-late stage level of distress. What’s needed, fairly quickly, is a comprehensive, in-depth assessment of the business to ascertain its overall viability. This should provide you with the information needed to make an informed selection of one of two fundamental options: a) To commit yourself to resolving the troubles at hand via a prudent business plan and strategy, or b) to simply shut the business down. If you opt to do nothing, in effect you’re choosing to let the organization die, even if it does so over an extended period of time. The key, then, is to intelligently evaluate your options and make a definite choice.
Create and Commit to a New Business Plan
Assuming you’ve elected to commit yourself to turning your company around, a key next step is to develop a new business plan. Depending on how long it’s been since you’ve gone through this process, it may be wise to start fresh, taking a hard look at every aspect of the business. This will include analyzing such things as your products and services, customers and suppliers, processes and technology, management team and staff capabilities, financial history and forecasts, facilities, as well as the industry, market size, and competition. Your core values should be woven pervasively throughout the business plan, and specific goals and action plans should be included for every area of the organization. You, as the leader of the organization, should be passionately committed to achieving the plan and you should insist that all key executives and managers are as well.
Get Back in the Driver’s Seat and Insist on Accountability
Many organizations get into trouble because their leaders and other key personnel become complacent. When a company reaches a certain level of success, the tendency is for its management team to begin to relax. The subconscious thinking is that the business can run somewhat on autopilot. This may or may not be a factor in your organization’s current troubles. Regardless, what’s needed now is a definite all hands on board effort to turnaround your organization. You must insert yourself squarely in the driver’s seat of the company and take hold of the steering wheel with both hands. In addition, it’s imperative for you to keep your eyes wide open and be keenly focused on everything important to your organizational success. To help with this, you’ll want to develop key performance indicators and metrics for all areas of your business, assign managers over each one, and then monitor their performance and hold them accountable to desired levels of productivity. It’s also very important to take things one step further. You, the organization’s leader, should subject yourself to strict oversight by your board of directors or one or more trusted and capable persons. Allow them to regularly hold you accountable to the performance measures that are set for yourself in connection with your leadership role.
Running a business or other organization is a challenging ordeal, even when everything seems to be operating without major problems. When troubles become apparent, especially when their severity threatens the survival of the organization, the task can seem monumentally difficult. As outlined above, meeting your problems head on and embracing the commitment to work through them is the wise thing to do. There is no guarantee your efforts will yield all the positive results you seek, however, it’s certain that a worse outcome would stem from the alternative route of denial, rationalization, anger, fear, and paralysis.
What do you think? Have you been a leader, executive, or manager of a troubled organization, and if so, what worked and didn’t work in your situation?