In the final part 3 of this series, Rob Goddard delves into the intricacies of managing and restructuring the workforce in a recently acquired distressed business. Upon acquiring the firm, Goddard inherited 44 staff members, including three directors and eight managers. Despite the ample leadership, only two were found to be effective in their roles, highlighting a common pitfall where skilled individuals are promoted beyond their capabilities into management positions, rather than being rewarded within their area of expertise.
The lack of a robust management and leadership team presented significant challenges in addressing issues such as the absence of Key Performance Indicators (KPIs), sporadic performance appraisals, and a general uncertainty among team members about what constituted success. To rectify these shortcomings, Goddard introduced several strategic changes, including the implementation of timesheets for accountability, particularly in the context of remote working. This initiative revealed discrepancies in workload distribution, with junior staff members often carrying a heavier burden than their more experienced counterparts.
Furthermore, Goddard established KPIs linked to client service level agreements (SLAs) to foster a unified approach between staff performance and client satisfaction. The recruitment of a customer service manager and a business development manager marked a departure from the company's previous 20-year history without these roles, paving the way for enhanced customer service and proactive business growth. The introduction of exit interviews also provided valuable insights for ongoing improvement.
Goddard's reflections extend to the crucial aspect of financial management, particularly the need for working capital in turning around a distressed business. He emphasises the necessity of being prepared to invest significantly beyond the purchase price to support the business during the turnaround process. By injecting working capital as director loans, Goddard and his team were able to begin repaying these loans in the second year, once the business became cash positive and profitable.
Drawing on his experience, Goddard advises living within one's means and cautions against excessive reliance on borrowed money. He underscores the importance of making tough decisions to ensure financial stability, reflecting on the broader implications of financial management for business owners.
Through Goddard's journey, we gain valuable insights into the complexities of managing a distressed business, the strategic interventions required to steer such a business towards profitability, and the paramount importance of financial prudence. His account serves as a guide for business owners navigating similar challenges, offering lessons on leadership, operational efficiency, and fiscal responsibility.
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