Turning Your Business Around (How to)

175 Pages·2002·0.57 MB·English

by  Mark Blayncy

Turning Your
Business Around
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Turning Your
Business
Around
How to spot the warning signs
and keep your business
healthy
Mark Blayney
HowTo Books
To Pat, for all her support
Published in 2002 by
HowTo Books Ltd,3 Newtec Place,
Magdalen Road,Oxford,OX4 1RE,United Kingdom.
Tel:[phone]. Fax:[phone].
email:[email protected]
http/www.howtobooks.co.uk
All rights reserved. No part of this work may be reproduced
or stored in an information retrieval system (other than for
purposes of review),without the express permission of the
publisher in writing.
©Copyright 2002Mark Blayney
First edition 2002
British Library Cataloguing in Publication Data
A catalogue record for this book is available from
the British Library.
Edited by David Kershaw
Cover design by Baseline Arts Ltd,Oxford
Produced for HowTo Books by Deer Park Productions
Typeset byAnneset,Weston-super-Mare,North Somerset
Printed and bound by Bell & Bain Ltd.,Glasgow,Scotland
Note:The material contained in this book is set out in good
faith for general guidance and no liability can be accepted
for loss or expense incurred as a result of relying in particular
circumstances on statements made in the book. The laws and
regulations are complex and liable to change,and readers should
check the current position with the relevant authorities before
making personal arrangements.
1
Contents
List of illustrations 8
Preface 11
Acknowledgements 12
1 Introduction 13
The importance of business skills 13
Managers are critical in a crisis 15
What to do in times of difficulty 16
Take the time to do a business health check 18
2 Turnaround 20
Obtaining support for a turnaround 20
Understanding your options 21
The conditions necessary for a successful turnaround 22
The phases of a turnaround 24
The turnaround process 24
How this book is structured 28
PART 1:RECOGNISETHE NEED FOR A FAST
TURNAROUND 29
3 Spotting the Warning Signs of Business Failure 29
Why businesses fail 29
The types of business failure 30
Normal business failure 32
Avoiding failure 33
The symptoms of normal failure 34
Checking your business’s health to spot the
warning signs 36
Take an ‘A’score test 41
4 UnderstandingWhy Businesses Fail 43
The causes of normal failure 43
The five key areas 45
Key points 54
How serious are your problems? 55
6 TurningYour Business Around
PART 2:STABILISEYOUR FINANCES 57
5 Understanding your Immediate Financial Position 57
What you need to know 57
Insolvency 58
Cashflow forecasting 60
Support from the bank 70
Key points 78
6 Managing a Real Cash Crisis 79
Wealth warning 79
Achieving balance 79
The key steps to survival 80
Controlling the cash you have 81
Obtaining more cash from normal trading 82
Obtaining cash or credit from elsewhere 82
Reducing and/or controlling outgoing cash 83
Reducing the amount of cash needed to trade 85
Improving profits 87
Improving management 90
7 Understanding and Controlling your Financial
Performance 91
What you need to know 91
Profitability 92
Financial stability 95
Using financial information 97
The management/financial information you need 105
Setting financial targets 106
Setting financial targets for your business 106
PART 3:DEVISEA PLAN 109
8 Setting the Strategy 109
It’s your business:what do you want to do? 109
Setting your personal goals 110
Industrial trends:‘PEST’analysis 114
Industry structure:‘Porter’s five forces’ 115
What products to sell into which markets? 115
Product lifecycles and product portfolios 118
Meeting customer expectations (the critical success
factors) 119
Contents 7
Competitive advantage 121
Unique selling propositions 123
The value chain 124
Family businesses 124
Setting business goals and deciding on an action plan 127
9 Managing Marketing 130
Successful marketing 130
The importance of marketing 130
Deciding whom to sell to 131
How to sell your product 133
Tailoring marketing strategy:the four Ps of marketing 134
Managing the sales process 135
Managing the salesforce 137
Key points 139
PART 4:MAKE IT HAPPEN 141
10 Managing Change 141
Managing and motivating yourself 141
Understanding your business’s structure and culture 143
Assessing your team 145
Managing people and the process of change 148
Managing a project 156
Getting stakeholders on board and keeping them
there 156
Assessing how well your project team operates 157
11 Managing the Risks 159
Identifying the risks 159
Dealing with the strain 159
Insolvency-specific risks 160
12 Summary and Conclusion 163
Recognise the need for a turnaround 163
Stabilise your finances 163
Decide what to do 163
Make it happen 164
Conclusions 164
Further information 167
Index 171
1
List of illustrations
1. Procedures under the InsolvencyAct 1986 23
2. The phases of a turnaround 25
3. Priorities in each phase of a turnaround 25
4. Turnaround management 27
5. Normal business failure:the decline curve 32
6. The symptoms of normal failure 38
7. Company B:maximum and minimum account balances 40
8. Management structure problems 48
9. Strategy challenges 51
10. Company F’s cashflow forecast (£) 63
11. Checking the arithmetic in the cashflow forecast 67
12. Debenture values 76
13. Prioritising actions 81
14. The working capital cycle 85
15. Company J:borrowing requirement 86
16. Types of cost 93
17. A personal goals summary 113
18. PEST analysis 114
19. Porter’s five forces 116
20. A product/market (‘Ansoff’) matrix 117
21. The product lifecycle 119
22. The Boston Consulting Group matrix 119
23. Critical performance factors 120
24. Graphing critical performance factors 121
25. Maintaining competitive advantage 122
26. The value chain 126
27. A project timetable 129
28. Customers’preferences for airline tickets 132
29. Customer buying behaviour 133
30. The product‘package’ 134
31. The sales funnel 136
32. Culture styles and structure types 144
33. Entrepreneurial and functional structures 144
34. Specialised culture styles and structure types 145
List of illustrations 9
35. A matrix structure 146
36. Management assessment:checklist 147
37. The barriers to change 149
38. The change process 150
39. Management approaches to change 151
40. Management styles to employ during a turnaround 152
41. Adapting management style to meet the needs of staff 154
42. Managing a project 155
43. The fears involved in running a business in difficulty 160
44. Risks directors face in the event of a company failure 161