Business Survival Sometimes Needs Fundamental Change
Copyright (c) 2010 Alison Withers
Constantly monitoring its activities and modifying them where necessary to improve its efficiency and its various offers is to be expected by any successful business.
Continuous business improvement does two things: it ensures peak efficiency in existing processes and keeps them at peak performance by continually updating them.
But on its own, especially when there are significant challenges in the wider economy, such as the current global economic downturn, continuous improvement may not be enough.
Such unexpected challenges can plunge a business into difficulties where its survival may be at stake and this may mean looking at a fundamental change to the way it operates.
Too often businesses struggling to survive rely on hard work and improving the existing business before they fail. Business improvement is all about laying foundations, tweaking the system and improving.
Fundamental change is a more radical look at the whole operation but it also needs care to avoid throwing the baby out with the bathwater by looking hard at the business and what needs to be preserved in order to survive and grow in the future. However, if a business tries to grow before bedding in new foundations following fundamental change it will reinforce problems that had not been sorted out.
For instance, it is an understandable reaction in a downturn for a business to trim costs although it actually may be better to look at its business model in depth and be open to more radical changes.
This can all seem too much when a company's directors are struggling to keep a business afloat at a difficult time. It is possible to be too close to the problem, however, and a combination of worry and a sense of urgency is not ideal for taking an objective look at the whole business model.
Here is where appointing a business turnaround adviser could make all the difference between failure and success. While the adviser is motivated to help a business succeed and will expect to work with committed managers and staff, they are not so immersed in the day to day minutiae of the operation and can therefore look at all aspects of the business, identify what is viable, what processes are draining the company and what actions can be taken.
In a recent case, a business turnaround adviser was brought into a manufacturing company to help it through difficult times when orders had dropped dramatically. The company occupied an expensive factory with consequent high overheads.
Having thoroughly examined the business and established that with some changes its products did have a market, the adviser proposed two fundamental solutions for cutting back on overheads: that the company reinvent itself as an assembly house with outsourcing production of components and that it should also get rid of its fleet of delivery vehicles and outsource that too.
They both provided the company with much more flexibility by cutting back its fixed costs in favour of variable costs. It could then focus on what it was good at, which was developing good products.
In a turnaround situation fundamental change may involve such things as radically changing the accounting system from a costly enterprise management system, which depends heavily on everybody knowing and doing their job perfectly, to a more simple order processing and accounting system that takes things back to more manageable basics.
About the Author
Business rescue adviser Tony Groom at K2 business rescue tells writer Ali Withers that, while continuous monitoring and improvement is fundamental to any successful business, there are times when it may need to undertake fundamental change. http://www.rescue.co.uk
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