How to: Turn around your struggling business
You are the proud owner of a new business, and you are ready to take a step back and let it run its course, having just gone through the exhausting and complicated process of acquisition. But if it is operating in the red, the acquisition may very well be just the first step in a very long journey.
Turning around a business can be difficult, but it is not impossible. It comes down to understanding why it is struggling in the first place, and then putting in place measures to combat the weaknesses to ensure an upward trajectory. Perhaps it is in need of more efficient management, digitalisation, or simply a rendezvous with its core values; whatever it is, the below guide will point out the key considerations to address the next best steps in turning around your new acquisition.
Less is more
If your new acquisition is a struggling business, chances are there are issues with its revenue streams. And investing too much too quickly might be counterproductive to achieving your goals, especially if you are not well versed in your new business’s financials and balance sheets. All expenses need to be nitpicked with a fine-tooth comb to see where spending is either too much or too little – after all, this can be the difference between the company pulling into success or finding itself sinking.
Specifically, operating costs need to be examined thoroughly to see if any and every expenditure contributes to generating revenue in the long-term, or if they are simply unnecessary. This may prompt you to look for ways to cut costs, but ensure that this does not compromise the quality of the product or service you offer.
It might be the case that spending is excessive as a result of the business expanding too quickly, internally or by establishing franchises and so on. You ought to ask yourself: has this growth really increased revenue, or has it simply reigned in a large bill? If indeed the expansion is costing you more than it is making, aim to streamline and simplify parts of the business to ensure a more efficient and economical growth trajectory.
The customer is always right
Your business is nothing without a loyal customer base, so it would be wise to ensure that they are retained even after the acquisition, and that all their needs are tended to as best as possible. While this may mean business as usual to continue providing the same high standards of customer service, it may also mean reassessing your targets and protocols to improve service to lure back in customers who are sitting on the fence and are maybe starting to look elsewhere.
It is a matter of communication. Simply asking them what they are unhappy about, and what they wish could improve, will give you two pieces of valuable information to work with. Such feedback will provide you with the customers’ point of view and insight as to how the business is perceived by the public, and an outsider’s perspective of what it is lacking and where the gaps lie.
Responses to key questions will provide you with an honest opinion of how the business is performing, and what more ought to be done to further break into the market. It can even inform you of niche areas that have still not been addressed – even by your competitors – and can provide you with direction for future developments.
Simplicity is key
Albert Einstein once said: “If you cannot explain it simply, you do not understand it well enough.” He also said: “Everything should be made simple, but not simpler.”
These principles should definitely apply to your newly acquired business as well.
If your customers are having a tough time navigating the ins and outs of your many services, it is worth thinking about streamlining process through digitisation and innovation. After all, you do not want clients leaving because they cannot use your product in the first place.
Consider how many processes, and which specifically, could be automated, so as to improve efficiency and ensure that your business is on par with its competitors from a technological perspective. Although this may be an initial expensive expenditure, the long-term benefits are guaranteed to outweigh the immediate costs, whilst also improving your bottom line in the long run.
Innovation is also key to ensuring your customers feel satisfied and fully catered to by providing them with a bespoke service tailored specifically to their needs. In turn, this will warrant loyalty, especially if the customers believe they are receiving the best possible service worth their money, and perhaps even more. Innovation would not be made possible without keeping up with industry trends and modernisation through technology.
However, it may also be worth taking a step back and re-establishing the business’s core values. It might be that you are offering too many services at substandard levels, or there are too many aspects that cannot financially benefit from digitisation, or even that the business has completely lost sight of its fundamental ideals and services. No doubt, in this instance, simplicity is key, and your new business needs to remind itself of the “why?” behind the company to regenerate drive and quality to get itself out of the red.
We said it before, and we will say it again: turning around a struggling business is difficult, but it is certainly not impossible. You as the new leader will require patience, financial grit, perseverance, and an injection of funds. It is vital that you strategise and conduct proper research before implementing a restructuring plan, but with the right approach, you’ll be turning around your new business in no time.
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If you want more tips on buying a business in debt, take a look at our other articles:
- How to buy a business out of administration
- Find distressed business opportunities at the right time
- What to watch out for when buying a business
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