Turnaround Management
Turnaround management is the disciplined sequence for pulling a business back from real decline - stop the bleeding first, then fix what caused it, in that order.
Watch seven boxes run left to right, each one only opening once the one before it is locked down.
Reach for this when…
- Cash is running out faster than any fix can be designed and implemented.
- Everyone agrees there's a crisis but nobody agrees what to do first.
- Previous 'fixes' have all been cost-cutting with no change to what caused the decline.
How to run it
- Stabilise first: cash, key customers, key suppliers, key staff - stop the immediate bleeding before diagnosing anything.
- Bring in new leadership where the people who caused the decline are also the people staff and lenders have stopped trusting to fix it.
- Manage stakeholders directly - lenders, major customers, key suppliers and staff all need a reason to stay, not an assumption that they will.
- Refocus the business on what still works, and stop or sell what doesn't.
- Fix the critical processes that are actually costing money or customers.
- Change the organisation - structure, roles, culture - to match the business you're turning around, not the one that got you into trouble.
- Rebuild the balance sheet through financial restructuring once the operating business is actually stable.
A worked example
Situation. Prakash Shrestha took over as MD of Himalaya Vista Resorts, a small hotel group in Kathmandu, Nepal, three months from missing payroll after two straight years of falling occupancy.
Applied. He stabilised cash first, renegotiating supplier terms and pausing all non-essential spend, before diagnosing anything. The diagnosis found one loss-making property dragging down two profitable ones through shared overheads.
Result. He sold the loss-making property, cut shared overhead to match the smaller group, and used the freed-up cash to refurbish the two remaining ones. The group returned to profit within five months of the sale.
The catch
Turnaround plans fail most often when leadership skips stabilisation and jumps straight to strategic refocusing while cash is still draining - there's no time left to execute a good strategy. It also demands a decisive, sometimes brutal kind of leadership that not every leader can or should provide alone.
If the plan's first move is a strategy workshop rather than a cash position, you're not stabilising yet - you're still bleeding.
Origin: Stuart Slatter & David Lovett