Second Chance: How To Turnaround A Declining Service Business Without External Capital Even When You Are Running Out Of Cash

In this article, I will share the framework that helps in successful turnarounds.

Turnarounds are painful, they are the most emotionally draining things any strategist undertakes. The environment of negativity from employees, hatred from customers and creditors make it more toxic. Add another looming risk, running out of cash. Is there a way around it?
After having done 3 successful turnarounds in the service business I will share with you how to do it well, so you lessen the emotional toll and give your business a second life.

The Primary Reason Most Turnaround Fail Is Because There Is Not Strategic Intent

This is what I mean by the strategic intent:

• You have a weak purpose behind the turnaround
• You are not looking closely at identifying existing assets
• You lack the discipline that will regulate culture and operations
• Finally, you are not making hard bets

Here’s how to step by step:

Step 1: Objective Diagnostics

You need an objective lens to identify what went wrong.

Usually, there are 4 major reasons why you are in such a situation. 1) The customer preferences changed 2) Your talented people left 3) Your products have completed their lifecycle 4) Your industry has major shifts

See what has led to most prominently contributing towards your lowered ability to generate cash.

Step 2: Identify The Biggest Assets You Can Still Leverage

Business is made of assets that deliver value, figure them out.

Some sources where you can discover these assets are customer segments, customer trust, technology & infrastructure, employ loyalty etc. A combination of such strategic assets can be used to deliver new value in the form of new business line or product or change of buisness model.

Step 3: Design A Cash Flow Program To Accumulate It

Cash is king, it is what pash bills, not profits.

In a turnaround, there is a deadline to when the cash will exhaust. So build a program to preserve cash: 1) work with customers that pay cash 2) focus on products have generated upfront cash 3) work with suppliers that work on credit 4) introduce pay for performance for employees.

In short, identify levers, discover new sources that can generate value, and preserve cash.

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