How to Revive Struggling Businesses: Lessons Learned from Turnarounds

Every business journey has its ups and downs, but some find themselves facing a deeper crisis—a make-or-break moment where survival is on the line. That’s where an experienced turnaround practitioner steps in, transforming struggling companies into thriving, profitable enterprises. With over 25 years of practical experience in owning and consulting to various fast-growth businesses, I’ve honed my skills in the art of business resurrection, navigating tough decisions, financial restructuring, and revitalising organisational culture. Here, I share some key lessons I’ve learned from my experiences as a turnaround practitioner.

1. Face the Brutal Facts, but Never Lose Hope

In a turnaround, time is of the essence. The first step is a clear-eyed assessment of the situation—no sugar-coating. What is really going wrong? What are the numbers telling you? This requires honesty, especially when addressing financial challenges, operational inefficiencies, or cultural dysfunctions.

Think of this step like diagnosing an illness. A doctor wouldn’t prescribe treatment without running tests and understanding the symptoms. Similarly, your business diagnosis should be thorough and data-driven.

While acknowledging the gravity of the situation, it’s crucial to maintain a positive outlook. A turnaround is about instilling hope, even when the facts are bleak. Hope keeps the team motivated through difficult decisions and tough times. Remember, the goal is not just survival but building a foundation for long-term success.

2. Cash is King—Preserve and Manage It Wisely

A key mantra in any turnaround is this: cash flow matters more than profitability in the short term. Without cash, even a profitable business can go under. So, preserving cash becomes priority number one.

Imagine your business is a car running low on fuel. It doesn’t matter how powerful the engine is (profit); if there’s no fuel (cash), the car won’t make it to the finish line.

One of the first processes is undertaking ‘The Cash-Flow’ analysis—to understand the Profit & Cash Story, Profitability & Working Capital Ratios, and trends over the past 3-4 years. Understanding ‘The Power of One’ Impact—the 7 key drivers/levers that we can adjust to turn the cash-flow and profitability around and drive sustainable growth—is crucial.

Strategies:

• Renegotiate terms with vendors to extend payment timelines, which can free up cash to keep the business operational. For instance, a restaurant chain in financial distress can negotiate with suppliers for extended payment periods, giving them breathing room to focus on customer engagement.
• Cut non-essential expenses, such as scaling back on underperforming marketing campaigns or pausing unnecessary office perks like catered lunches and gym memberships, directing those funds toward customer support improvements that retain clients.
• Focus on quick wins that bring in revenue, even if they aren’t core to your long-term strategy. For example, offering discounted annual subscriptions for quick cash influx can keep operations running smoothly until larger contracts are secured.

By focusing on liquidity, we create breathing room to implement more strategic changes.

3. Rebuild Trust and Communication

In a crisis, trust tends to erode—among employees, with customers, and often with stakeholders. Rebuilding trust is essential to stabilise morale and align everyone towards a common goal.

Think of trust like a bridge connecting you to your team and customers. If that bridge is cracked, movement stops, and progress halts. Rebuilding it ensures everyone can move in the same direction again.

Transparency is critical. Regularly communicating the challenges, the plan, and the progress (this is our meeting rhythms). Share the reality of the situation, but also the vision for recovery.

This doesn’t just apply to internal communication; stakeholders and customers should also feel involved and informed. Updates on progress reassure them that your business is committed to regaining stability and excellence.

4. Find Your Core and Build Around It

When resources are tight, trying to do everything becomes a risk. Instead, focus on what your business does best—the core products or services that customers value most. This often means cutting down on distractions such as low-margin products, underperforming segments, or initiatives that drain resources.

Imagine a ship taking on water. You focus on what’s necessary to stay afloat and discard anything that weighs you down.

5. Empower the Right People

Turnarounds are people-driven. It’s not just about fixing processes; it’s about building a team capable of executing the recovery plan with agility and determination. Sometimes, this involves making tough calls—replacing key roles with those who have the energy, experience, and mindset needed for a turnaround.

It’s also important to empower the existing team. Identify team leads who thrive under pressure and promote them to manage critical areas. Using the ‘2 x Second Lean’ methodology, involve employees in process improvement and problem-solving. Grant them the autonomy to take ownership of their roles, which builds collective responsibility and drive. This shift energises the teams and results in better outcomes.

6. Speed and Adaptability: The Turnaround Advantage

A turnaround isn’t about perfection; it’s about speed and adaptability. We don’t have the luxury of time for extensive planning. Rapid experimentation and course correction are key. Just like a race car driver who makes constant, subtle adjustments to stay on course while speeding through tight turns, implement changes in the business quickly while remaining agile enough to adjust as new information comes in.

7. Prepare for the Future, Not Just the Present

While the immediate focus of a turnaround is survival, long-term planning is just as crucial. As soon as stability is within reach, start thinking about scaling for sustainable growth. This could mean investing in digital transformation, revisiting the product roadmap, or fostering a strong culture that can withstand future challenges.

A successful turnaround doesn’t just bring a business back to where it was; it creates a more resilient and agile organisation ready for whatever comes next.

If your business is facing challenges and needs expert guidance to navigate a turnaround, reach out to us at Strategy and Execution Business Advisors. Let us help you assess your situation, preserve cash flow, and rebuild trust to put your business back on the path to long-term success. Contact us today to get started!

TED BONEL, SCALING UP COACH – STRATEGY & EXECUTION BUSINESS ADVISORS

Need assistance to help your team achieve your objectives to grow your business? Contact me at tedb@strategyandexecution.com.au to schedule a free 30-minute discovery meeting.

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