Every SME aims to perform at their best. Optimising your operations should ideally bring growth and profit while enabling you to satisfy customers and meet demand.
However, you might not be getting the results you want. This can include declining profits, production problems, poor customers reviews, falling sales or the overall stagnation of your business.
Any of these is reason enough to get back on track. By identifying the right turnaround strategy for your SME, you could well ensure its survival and extend the legacy of your company for possibly years to come.
Below, we’ve listed the most common turnaround strategies for a small business.
- New management
When a business needs a rapid turnaround, a change in management can be instrumental. By appointing a team with the appropriate experience and skills, they can drive evolution and find a new direction. This is where a management buy-out or buy-in might come in, enabling the sale of the business to new leadership team.
The management will need to act quickly, they might need to address issues such as company culture and values. They need to motivate staff and minimise disruption while the business adjusts to ensure ultimate success.
- Improve cost-efficiency
When the issue your SME faces is related to operating at a loss or rising expenses that are eating into profitability, it is a sign that you need to improve cost-efficiency.
This may include re-evaluating your suppliers, eliminating unnecessary expenses, reducing waste and power consumption, or streamlining your processes.
The key is not to let your cost-efficiency changes affect the quality of your products and services, as the consequences could impact your sales. It’s essential to ensure any changes you make have the desired positive effects – ideally, by reducing costs and improving your profit margins.
- Adapt your core offering
Another option for turnaround is to shift your business offering. This is particularly valuable if you struggle to generate substantial sales or if the market’s needs have recently changed.
Adapting your offering may include adding new products and services to your portfolio or finding different markets to target. Your aim should be to drive demand by giving customers what they want while also staying in line with (or ahead of) your competitors.
By expanding your product/service portfolio, you can drive sales potential and remain relevant in the market. If this is combined with cost-effective operations, it can dramatically improve profitability too.
Retrenchment is another common form of a turnaround for those experiencing subpar results or failing business areas. It cuts costs by streamlining operations only to those performing well, which could include reducing your offering or merging functions.
Removing entire parts of your company can seem brutal, but it may be necessary if those areas have become obsolete or cost-ineffective. You need to ensure that the elements of your business that remain can bring in enough revenue to keep you afloat, even if some improvements are required first.
It’s also essential that the retrenchment restructures your business to focus on performance. From there, you should be able to grow those functions to maximise potential. If you simply remove pieces, you stand the risk of shrinking your business – which can lead to further trouble.
If your business has reached a point of no return in its current state, it might be time to reposition. This means adapting your branding and value proposition to give a new feel. This is particularly useful if your previous branding has become dated or associated with negative publicity or if you want to target a new audience.
Start by scoping out the space you want your business to fill, ideally finding one that makes sense for your operations and drives demand. Then, consider what adaptations you need to make – this will likely include updating your branding and marketing but may also include changes to products, people and processes to bring them in line with your updated values.
By repositioning, you can turn a struggling business into something new without the upheaval of having to start again. It also allows you to follow evolving market trends to enable long-term survival.
If your business has any of these symptoms, taking prompt action can be the difference between survival and closure. By identifying the issues at play and a suitable turnaround strategy, you can revitalise performance and ensure resilience.
UK Business Advisors can support you in any issue your business is facing and help you find an appropriate strategy to get you back on an even keel.