Home News & Insights Executing a Successful Business Turnaround Plan
December 5, 2020
Executing a Successful Business Turnaround Plan
By Bill Patterson, CTP, CIRA, CPA , Gregory S. Milligan, CTP , Erik White, CIRA

Business turnaround specialists

This is the third installment of a three-part series co-authored by Bill Patterson, CTP, CPA, CIRA, Erik White, CIRA and Greg Milligan, CTP of Harney Partners.

 4 critical components to successfully execute a business turnaround plan

Based on our work with many organizations of all sizes, we have witnessed a wide range of leadership characteristics of the Turnaround Leader, translating into varying degrees of success of the corporate turnaround. In part three of our business turnaround series, we introduce the four leadership fundamentals that best contribute to a successful transition for your organization.

After you have made the decision to do what it takes to turn around a troubled company and have devised a detailed plan to achieve your goal, it is now time to make sure all that strategic thinking pays off in the execution. Success often relies on bringing four fundamental characteristics to the effort. If you demonstrate these qualities, you’re much more likely to reach your goal.

1. Visibility: Be An Engaged And Accessible Leader

As you face the pressure of forecasting cash flows accurately, answering to key stakeholders and addressing the financial and operational challenges facing your organization, the temptation to shut the door, put your head down and just power through decisions and actions is going to be strong. It’s also going to be potentially one of the biggest mistakes you’ll ever make.

Remember that you need to cultivate the support and goodwill of the employees – and, to a degree, key customers and vendors – who are in this fight with you. Don’t sequester yourself in your office, hide behind emails or limit meeting time to your senior team. This is the time to engage everyone.

Set the tone for the work to come by taking a practical, honest approach. Listen to the concerns of key employees and influencers, solicit their input about underlying issues and potential solutions, and let them know their perspectives are important as the company goes through the turnaround process. Doing these things can give you invaluable insight into the organization and its problems going forward and can boost their morale and galvanize them to lead employee support for the turnaround.

On a broader scale, across the organization, people are likely to be feeling uncertain and fearful about what is happening and what is going to happen. The best thing you can do for the company, for them and for yourself is to openly share your evaluation of the situation, be clear about the plan to address them and demonstrate your commitment to taking strong action.

2. Transparency: Be A Strong Communicator (Even Better, Be An Overcommunicator)

There’s no such thing as too much communication when you’re working to turn around a business. Communication builds credibility – with employees (as described above), with financial and other stakeholders in the business, and with the press and the public. You can’t afford for anyone to view you as secretive or evasive at this sensitive time. Rather, you want to be seen as someone who is providing everyone with consistent information throughout the turnaround process. This will reinforce your strategy and vision for the future and instill confidence in your ability to lead the company into that future.

Keep in mind that when a company’s viability is in question, rumors and misinformation are likely to grow and spread. Constant communication of clear, accurate information is critical to getting the right message out and preventing erroneous beliefs from undermining your efforts. If anything, you should make a point to over-communicate important information.

On the other hand, while over-communication does mean going above and beyond to be sure people understand everything they need to, it shouldn’t mean overwhelming them with information they don’t need. Take care to evaluate different stakeholder groups in terms of what’s important to them, and use what you learn to develop a communications strategy that provides appropriate information to each type of stakeholder, whether it be employees, vendors, customers, lenders, or equity holders.

If there’s been a decision to turn around the company through chapter 11 bankruptcy reorganization, that creates another set of concerns with regard to communication. Bankruptcy is often a misunderstood process and many people have their own perceptions of the impact of bankruptcy on them.  You’ll want to be sure all interested parties are clear that you are pursuing chapter 11 bankruptcy and communicate the end goal of the bankruptcy. You’ll need to remember, too, that chapter 11 bankruptcy requires your company to follow a highly structured process that includes requirements for confidentiality, reporting and other aspects of communication.

3. Discipline: Be Unwavering In The Commitment To Move Forward

There’s much that can potentially distract you from your mission in a business turnaround – incomplete information, imperfect data and a seemingly endless list of things that must be accomplished, often against tough odds and within a tight timeframe. But even when it seems like you don’t have enough information to proceed or the information you do have is in flux, maintaining the status quo is not an option. To keep the organization on track and moving forward toward a successful turnaround, you must act decisively, sometimes even in the face of reservations or concerns. Inevitably, there will be many tough decisions that will need to be made in order to successfully complete your turnaround. You must be disciplined to make these decisions and then be disciplined in the communication of the decision across the organization and impacted stakeholders in order to get complete buy in.

You shouldn’t have to do it alone, though. Once the turnaround strategy has been communicated through a detailed, written plan, everyone is accountable for what happens next. What falls to you is to lead the way in building momentum and keeping it going. Throughout the turnaround process, make sure to recognize and celebrate milestones along the way; it can have a snowball effect on your progress toward the ultimate goal.

You not only don’t have to do it alone; you also don’t have to do it all at once. If you have a list of 15 priorities, focus on the first three. Then move on to the next three. If you try to do everything at the same time, you simply won’t be as effective. And you may in fact end up getting almost nothing done.

4. Agility: Be Ready To Turn On A Dime

Staying disciplined and focused is one thing; wearing blinders is another. You must remain alert to changing circumstances and how they affect your path to a successful turnaround. Just because you have a plan mapped out doesn’t mean you shouldn’t vary from it when a shift is warranted. If incomplete information leads to mistakes, that’s understandable. Incremental success with ongoing adjustments is preferable by far to no forward movement at all.

So be ready to pivot when necessary – not just in how you respond to change, but also in how you respond to other stakeholders’ reactions. This is true even if (or especially if) their feedback is not what you were expecting.

And no matter what happens, always keep the big picture in mind. You and the other leaders of your organization have set appropriate goals, crafted a strategy and developed forecasts to help guide your efforts. As you execute, spend time evaluating how things are actually going in the context of what you were expecting. Ask yourself:

  • How have the results compared to the forecast? What drove the variance from the forecast?
  • Do you need to adjust expectations?
  • Can you improve performance by renegotiating selected contracts or agreements?

Consider the answers, and then revise your forecast with any needed refinements in mind. In other words: strategize, execute, review and repeat.

Wrap up

You’ve invested considerable effort and time to lay the groundwork for a business turnaround. Don’t run the risk that your carefully laid plan will collapse due to a failure of execution. When you keep in mind the four critical qualities described here, you improve your chances of preserving – and even improving – the business, jobs and profits it creates.

Investing in professional consulting services with business turnaround specialists will allow you access to the independent expertise needed to move the business forward. Harney Partners offers a wide range of restructuring consulting and advisory services to help companies identify the key issues holding them back to realign themselves with new strategic plans, crisis management, re-positioning, divestiture and more. Contact us to learn how our experts can help optimize your business outcomes.

Bill Patterson, CTP, CIRA, CPA
Executive Vice President

Bill has 35 years of experience providing financial advisory services to business stakeholders of organizations – including ten years with Big Four firms, plus experience as the CFO of both early-stage and middle-market companies. He has extensive experience navigating the complexities of recapitalization, bankruptcy, reorganization, and litigation issues. Additionally, Bill has broad experience in organizational and corporate governance and risk in the U.S and abroad. His industry expertise includes manufacturing; construction; consumer products; distribution and transportation; services; E&P; oil field services; retail; renewable energy; medical devices and equipment; and financial services.

At Harney Partners, Bill is an advisor to corporate stakeholders and companies experiencing a complex transition that are seeking financial and operational stabilization.

Gregory S. Milligan, CTP
Executive Vice President

For more than 25 years, and with engagements involving onsite advisory to clients in more than 25 states and multiple foreign countries, Greg has maintained a practice surrounding troubled situations or situations that require fiduciary oversight. He joined Harney Partners in 1998 and opened the Austin office in 2001. Since that time, he has both led and collaborated on engagements with highly successful outcomes, meriting multiple peer-review awards from the Turnaround Management Association and the M&A Advisor.

Erik White, CIRA
Managing Director

Erik has amassed more than 14 years of experience in corporate finance, business restructuring, forensic consulting and asset management. He provides strategic advisory services, both financial and operational, to companies experiencing a complex transition.  From Fortune 500 to lower middle-market companies, Erik has the depth and breadth of knowledge and experience to support clients in distressed situations.