The Small Business Turnaround Guide takes a holistic approach to small business profitability and the everyday problems encountered by small businesses and their owners. Unlike other books targeting small businesses we begin by helping them to stop the bleeding and correct their cash flow problems, go on to giving them detailed solutions to over a dozen of the most common shortfalls that lead to small business failures and difficulties.
The words “shattered dreams” or “shattered lives” may conjure visions of the aftermath of war or perhaps lives that have been devastated by an addiction to drugs or alcohol. But equally horrifying are the dreams and lives that are shattered when a business is forced to close its doors.
According to the SBA approximately 600,000 United States businesses are forced to close their doors each year. While the symptom of a troubled business can be seen in poor sales, cash shortfalls, uncommitted employees, poor leadership or a myriad of other issues, at the heart of the matter is the majority of business owners don’t understand the business and management processes that should be implemented to dramatically improve the performance of the business.
The majority of books that address troubled companies are focused on large businesses and the ones that are directed at small businesses are usually focused on a specific issue such as planning or leadership. It would be wonderful if there were only one or two issues that small businesses faced but the truth is most entrepreneurs are excellent technically at their specialty but lack the other skills needed to allow them to manage their business successfully. They are well qualified to work at their business but totally unqualified to work in their business.
Here is a look at what you will find in the book:
Chapter I How Funny is Your Troubled Business
Chapter I discusses the many people’s welfare that the owner has responsibility for. While the potential damage to each one of these people is very real, there is, as a result of poor business performance, the potential for damage to the owner from which he or she may never recover. The chapter goes on to detail the myriad of reasons that may be at the root of the business problems and then concludes with the options that are available to repair the business.
Chapter II Stop the Bleeding
Chapter II makes the assumption that the individual reading this book is the owner of a troubled company and recognizes that before the contents of this book can be effective the company must be more stable. To accomplish this, the owner must “stop the bleeding” which means that they must increase the amount of cash available to the business. To do this we set before them the tough decisions that lay before them which may include reducing the number of employees, slashing all but the most important expenses, focusing on collections and negotiating payment terms with their vendors. Once the reader has accomplished these things there will be time to implement the processed described in Troubled To Triumphant.
Chapter III The Process of Change
Change is so difficult to bring about but fortunately there is a process that will allow the business owner to make changes. When there are multiple changes necessary to improve a business it is a natural instinct to just fire away at the multiple targets of change that are out there, Chapter III tells the reader that they must identify what are known as the wildly important goals and leave the rest of them alone no matter how important they may seem. In other words, sometimes you have to say no to the good in order to accomplish the great. The difference in the way Presidents Eisenhower and Kennedy approached the goal of getting the United States into space is a perfect example of communicating wildly important goals is highlighted. We also acknowledge the fact that while these changes are being worked on the normal business crises are still popping up and must be addressed. This is called working in the whirlwind and we discuss how to go about this. Change must be measured and the lead and the lag measures are explained. The importance of keeping a compelling scoreboard and the process of creating the right scoreboard is also explained along with the concept of creating individual accountability for achieving individual pre-established goals.
Chapter IV The Physical Examination
A typical consulting engagement begins with what I call the physical examination. It is similar a physician sitting down with a new patient and taking their health history. This chapter asks the reader fifty Six thought provoking questions designed to make them think deeply about their situation. The areas examined are general corporate questions, managerial finance, production, computerization, banking and compensation, personnel, inventory, production costing, and organization issues including the reader to take a close look at their current key employees.
Chapter V Examine Your Test Results
This chapter addresses typical answers to the fifty six questions. We explain what various answers to the questions mean to the company and intersperse important facts with numerous real life examples of problems that I uncovered during my consulting engagements and what the outcome was.
Chapter VI The Lab Work
Chapter VI can be compared to the part of a physical exam in which the doctor sends the patient to the lab for a series of diagnostic tests. During this segment we instruct the reader how to perform financial analysis on their own company. At the conclusion of this chapter they will be able to compare their own operating results against their Best Established Performance and against the performance of upper quartile companies in the same industry and of the same size. When this analysis is complete the reader will have a good idea as to what their real profit potential is and be able to work toward that goal. They will be able to produce a report reflecting their key ratios along with an explanation of those ratios. We also include detailed instructions as to how to enter the data on the analysis worksheets that we have provided for them in the accompanying CD. Financial Analysis explanation
Chapter VII Lead Your Way To Recovery
Chapter VII is all about leadership and the development of leadership skills. The readers are introduced to what it takes to be an Enterprise of Excellence and why they would want their company to make the “most wanted” list. They are led through the process of creating their vision. We describe the concept of serving their customer at a higher level to the point of creating Raving Fans. They are then taught to measure their success at serving the customer by utilizing Customer Satisfaction Surveys. The importance of creating empowered gung ho people, and the importance of praising them and admonishing them in one minute increments. The importance of managing their time effectively by working in the correct quadrant is also discussed. Throughout the chapter we introduce real life experiences with some of our client companies.
Chapter VIII Plan Your Recovery
We often tell our client companies that not having an operating plan is like going on a trip with no map and no destination. You just go. From that point on we explain to the readers how to create an operating plan beginning with reviewing their vision. They then learn how to develop their revenue plan, their cost of goods plan and their expense plan. They then learn the importance of having someone that you trust to review the completed plan.
Chapter IX The Harder I Work
Chapter IX deals with a common complaint from small business owners. They look hopelessly at me and say something like “Sandy, I don’t know what to do; it seems like the harder I work the further behind I get.” What I have learned is that these frustrated owners have something in common. They let their employees delegate up to them rather than holding the employees accountable for performing their jobs. So in this chapter we talk about employee accountability. Corporate communication is vital part of a corporate recovery and accordingly we discuss the process of communication along with the importance of a weekly management meeting. This chapter even sets out the template for a meeting agenda. Every management meeting should result in the assignment of action items and the process of assigning and monitoring action items is fully explored.
Chapter X Know Where You Are At All Times
During the physical exam section of the book we discuss the importance of receiving financial statements by the 10th working day of each month. I want my clients to know where they are long before the financial reports are issued. Why? Because knowledge is power and if the earlier a business owner realized that there is a problem, the higher the probability is that the problem can be solved before damage is done. Every company has key statistics that make or break the company and each company is different. At this point in the book we roll out the Lightning Report which is a repository for those key statistics set up in such a way that the business owner can tell at a glance what is going well and what is not going so well. This chapter contains a discussion of key statistics and a sample Lightning Report.
Chapter XI Sell Your Way To Recovery
Here is an absolute truth. Every company sells something. There is not a for profit company that does not sell a service or a product. The thing that amazes me is that the majority of the people charged with selling are not professional salespeople. They are merely order takers. So this chapter sets out to let owners know that there is a process available that with practice can turn an order taker into a sales person. The reader will finish this chapter understanding the psychology of why people buy and that knowledge is powerful. Once a salesperson really understands that people make buying decisions based on pain, they are way ahead of the game. They will learn how to create an upfront contract with a prospect, which qualifies the prospect and they will learn how to mine for pain by asking the right questions. With a little practice they will be able to execute important sales processes such as the magic wand reverse, the negative reverse and the Colombo approach. The chapter ends with instructions on how to avoid buyer’s remorse.
Chapter XII Goal Setting
In this chapter we discuss the process of goal setting including a discussion of the similarity of the purpose of goals in a business and the purpose of DNA in our bodies.The reader then learns about how to utilze goal allignment and action plans including the valuable processes of Quantitative Measurement and Goal Execution. We teach the reader how to establish the goals for the Company as a whole and for each additional department and how to establish action plans designed to achieve the goals.
Chapter XIII The People Side of the Business
Sometimes it seems to me that the things business owners like to talk about more than anything else is how bad their employees are and the fact that they are the sole reason for the situation the company is in. In Chapter XII we remind them that those employees didn’t just magically appear, they hired them and if they have become bad employees it may well because they are poorly managed. We explain the Employee survey process and show our readers the average results that we have seen during consulting assignments and explain what the results mean. Given that many employees really don’t understand what is expected of them we teach our readers how to create a job description and show them an example of a job description. We follow that by addressing the fact that many employees don’t know when they have done a good job we teach them how to implement the processes of Goal Integration and Quantitative Measurement. We tell them the tale of two companies as we describe experiences that we have had with the Ritz Carlton and with Home Depot. The next step for them is to learn how prepare employee evaluations and we show them sample evaluation forms and explain the process that should be used during an evaluation. We then give them the formula for utilizing the employee evaluation to take the subjectivity out of salary adjustments.
Chapter XIV Pay Your Way To Recovery
Chapter XIII explains to the readers how important it is to pay their employees in ways that motivate them. We explain the importance of paying a salesperson on commission as opposed to a salary. They are introduced to a process that I developed called “It’s Your Business” in which salespeople are treated as if they are business owners. The process of managing salespeople is vital and so we not only explain the process but we provide the sales management forms for them to use. As they complete this chapter they are introduced to several compensation plans which are designed to motivate specific positions. The chapter winds up with a Pay for Performance plan that gets all employees into the act and with which I have had great success.
Chapter XV Collect Your Way To Recovery
It’s great to have professional sales people and we think we got our readers well on the road to accomplishing that but all the sales in the world are useless if the money generated by the sale is not collected in a timely manner. When I listen to the feeble attempt to collect receivables that many companies utilize, I wonder how they collect any money. When I hear things like “Hello, this is Susie with the John Doe Company and uh, I wonder when you could pay us” I am not at all shocked that they have cash flow problems. In this chapter I remind the readers that once they sell a customer a product or a service, the money that is to be collected is no longer the customer’s money. It is now their money. So I teach them to be proactive in collections and to utilize a powerful process that involves the specific words that should be used in collections, the importance of getting a commitment and we even set out the major reasons given for non-payment and teach the appropriate responses to those reasons. We wrap the chapter up with the process of measuring the collection results.
In addition to easy to understand instructions as to the changes that are necessary to improve their business operations and prevent failure, the reader of Troubled to Triumphant will be provided, upon request, with pre-formatted spreadsheets that allow them to enter data from their business and be presented with actionable information such as number of days sales in accounts receivable and how much money they are leaving on the table each year compared to similar companies. As an extra bonus, for purchasers of Troubled to Triumphant, Sandy will provide them with a free analysis as too how much money they are leaving on the table each year as compared to companies of similar size in their specific industry. This is an $800 value which Sandy will provide absolutely free.
The readers of this book who are determined to really utilize the processes provided will receive much of the same knowledge and benefits as if they had engaged a consulting firm at a cost of several hundreds of dollars per hour.