What does “successful business turnaround” mean?
At first this might seem to be a simple questions, but like many things in business, it is more difficult than it first appears when you get further into the details.
It turns out there are many ways to measure and define a “successful turnaround.“
You might say that keeping your business alive for at least one year means that you have executed a successful turnaround.
You might say that keeping it alive for five years is the definition.
You might say that converting your business from a nonprofitable to a profitable company is the definition.
Or you might say that it is something else.
I am going to define what I call a successful turnaround. A successful turnaround has two elements:
1) Your business has a positive cash flow
2) Your business is transformed to sustain a positive cash flow
I think you could reasonably add a third element to the above definition:
3) Your business has a well-defined plan to restructure and further stabilize
I think this last item reflects that it is not enough just to fix a few problems with the business and nudge your company back into positive cash flow territory. The fixes you implement to accomplish this may be only temporary; as a result, your company may inadvertently fall back into turnaround range. Therefore, further steps are necessary.
If—in addition to correcting your immediate problems and sustaining a short-term positive cash flow—you restructure your company SUCH THAT THE REVENUE STREAMS ARE MORE STABLE AND PREDICTABLE, then you will be on the right track to stabilizing your business and avoiding the need for a future turnaround.
André Larabie
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