A twelve-part blog series outlining how to save, turnaround, and grow, your struggling or failing professional client service consultancy, architects practice, design studio, marketing communications (marcomms), PR, digital or creative agency business.
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Total Business Turnaround
Part 03 | Simplification
What does it mean when something is simple? In this case it means doing away with anything that is not essential to the function of your business. You need to question everything in your business. Every system, every role, every responsibility—including that of the CEO—needs to be questioned and examined thoroughly and those things that are not necessary need to go.
Simplification is rarely easy or nice, but you must always keep your business objectives in mind and be as direct and honest as you can. If it's done quickly and openly, a fresher, more capable, more nimble business will emerge at the other side, ready to take on the new challenges it will face as it moves from survival to success.
How you price your products and services has a great effect on your ability to thrive as a business. Too high and you are pricing yourself out of the market. Too low and you will be unable to sustain yourself. Finding the right point, though, can be difficult. However, you should not leave it entirely to chance. You must do a little research into your market, your industry, your costs, different pricing strategies and tactics—everything that goes into pricing your products.
Another way to boost your profits is to cut your overhead. This is a time to figure out what you really need and what you can do without; what you have to spend full price for and what you can get at a discount.
If you are not doing business out of your garage, or your car or a pay phone, odds are you are paying rent; and depending on your location, you could be paying a hefty sum to the landlord each month. There are a number of things you can do to make that rent a bit more palatable, such as negotiating a reduction in rent, paying monthly, renting desk space, and relocation.
Lowering Staff Costs
As oppressive as it may sound, continual monitoring, reviews, and reporting on staff productivity is essential for the health and development of your business. It is also a necessary thing for the health and growth of your employees, though few are likely to see it that way. Some other things you can do to lower your staff-related costs include eliminating redundancy, instituting a program of forced holiday leave or a shortened work week.
Maintaining Cash Flow
Cash is the lifeblood of your business and it has to flow. You can keep the cash flowing, however, if you bill promptly, avoid overtrading, recover debts, trim inventory, renegotiate your credit limits, approach your bank, consider factoring or sell some assets.
Charges, Fees, and Other Expenses
During a restructuring process you will be required to provide a number of documents dealing with expenses. If you haven’t got them to hand, or can’t get hold of them easily, take action immediately to get hold of copies where you can. The absence of these documents can make things take much longer than necessary and throw up some surprises if you’re not prepared.
You must determine what is best for the business and your creditors because quite simply you are currently funding your business with their money and you’re doing it, quite probably, without their consent. In that situation, your only real options are trade and repay, loans, investment, extracting your business and restructuring, or administration and liquidation.
The Restructuring Process – Program and Costs
It is hard to say what this whole process of restructuring will cost. It really all depends on the specifics of your case. However, there are a number of things you can count on having to deal with – costs, goodwill, time and effort, the program itself, incorporation, banking and VAT issues, and business financing.