Small-Business Planning in Times of Trouble
As the saying goes, stuff happens. The economy tanks. Part of planning for your business should include planning for trouble. A big client takes its business elsewhere. A product that looked really good on paper doesn’t appear nearly as attractive in real life. Some regulatory ruling abruptly alters your business landscape. A competitive assault blindsides your business. Key employees stage a mutiny.
You’re probably yelling, Stop! You hardly need more examples to get the drift. In business, sometimes the going gets tough, and your strategic plan is reduced to tatters as a result. That’s when you need to get out your business plan — in a hurry — to begin a dust-off.
Maybe your business model — your plan for how you make money — isn’t quite what it was cracked up to be. Maybe your financial projections were a little too rosy. Maybe your analysis of your strengths, weaknesses, opportunities, and threats missed some key points.
Diagnose your problems
Most companies don’t land in hot water overnight. Usually some warning signs present themselves, even if they’re slight and build slowly over months or years before someone at the top finally says, Uh-oh.
Suppose that customers aren’t flocking to your new location the way you thought they would. Go back to your original market analysis to see what assumptions you made at the outset. Next, look at how the current situation differs from the way you envisioned it to be.
Do you face unanticipated competition? Have your customers’ wants and needs changed? Was your promotion inadequate? Pinpoint the problems and redraft your business plan to accurately address your business situation.
Don’t launch into the blame game or look for scapegoats. Even if you ultimately decide that you need to make personnel changes, the first step isn’t to place blame; you need to figure out what went wrong and how to get your business back on track.
Get a second opinion
Sometimes getting an outside opinion about a difficult business situation can be very beneficial. When your company faces a crisis or near crisis, you can bring in turnaround professionals to help determine what’s wrong and how you can revise your business plan to address the situation. To find consultants, start at the Turnaround Management Association website.
Before you enlist outside help, you may want to bring your own management team together to assess the damage and to attempt to find a solution. Done right, this meeting of minds can create a stronger sense of teamwork and inspire the troops. And, with any luck, you’ll come up with good creative and strategic solutions.
Your own management team may not see critical issues objectively. Vested interests, assumptions, and emotions can get in the way. Outside consultants, such as turnaround professionals, don’t carry the excess baggage. They can take an unemotional look, pinpoint what’s wrong, and help arrive at a solution — even if it’s a painful one. Most are available to guide the redirection of your business plan and to help steer the turnaround process.
Analyze your current situation
To begin shaping a plan to get your business back on course, you first have to know exactly where you stand — with an emphasis on the word exactly. You won’t do yourself any favors whitewashing your situation or clinging to overly optimistic projections. The time has come to get real.
When your company is in trouble, focus on three parts of business planning:
Financial review: Business troubles usually boil down to a simple, painful fact: Money is flowing out faster than it’s coming in. Now you have to assess your current financial picture, focusing on cash flow and revised financial projections.
SWOT analysis: The opportunities and threats your business faces today may have changed since you last analyzed your business situation. Even your relative strengths and weaknesses may be different. Take time to revisit your last SWOT analysis and direct your attention to the strategic issues that are most likely to have an immediate positive impact on your situation.
Business model: Your business plan describes how you plan to build your business. Your business model defines how your business will make money. If your business plan isn’t working, or if your finances are askew, a shaky business model is very likely to be part of your problem.
Revisit your notions about how your company expected to make money. Spend some time thinking about ways to revise or expand your model to bring in more revenue as you work to turn your business around.