Business Turnaround Process- example checklist of steps to be taken

REVENUE:

1. Concentrate efforts on areas where the highest returns are expected: Focus on markets, customers, partners, or offerings that have historically yielded the highest profits.
2. Prioritize addressing customers or partners that pose financial risks while offering little strategic value: Give priority to dealing with customers or partners whose financial instability poses a risk, yet they contribute minimally to strategic goals.
3. Redirect marketing strategies towards core prospects: Channel marketing efforts towards essential prospects, ensuring resources are used effectively to attract the most promising leads.
4. Explore innovative business models or revenue streams: Investigate new potential avenues for generating revenue or adopting novel business models in line with market trends and customer preferences.
5. Evaluate pricing strategies and adjust them as necessary to maximize profitability: Assess pricing tactics and make adjustments to enhance profitability, including minimizing discounts or implementing dynamic pricing based on demand and competition.
6. Assess the product or service portfolio to ensure it aligns with market demand and company objectives: Review the product/service lineup to ensure it meets market demands and aligns with company goals effectively.

COGS:

1. Aim to reduce Cost of Goods Sold (COGS) by optimizing direct material sourcing: Strive to lower COGS by optimizing the procurement of raw materials directly.

2. Streamline production processes to improve efficiency and reduce lead times: Enhance operational efficiency and minimize production lead times by streamlining processes.

3. Take advantage of market downturns to renegotiate contracts with key raw material suppliers: Utilize market downturns as an opportunity to renegotiate contracts with crucial suppliers for raw materials.

4. Simplify product offerings to reduce complexity and lower production costs: Streamline product offerings to decrease complexity and cut down on production expenses.

SG&A:

1. Identify and implement immediate cost-saving measures in areas such as travel expenses, IT infrastructure, rent, and recruitment: Find and execute immediate cost-saving measures in expenses like travel, IT infrastructure, rent, and hiring.

2. Evaluate opportunities to convert fixed costs into variable costs: Assess options for converting fixed costs to variable expenses, offering more flexibility during uncertain times.

3. Consider outsourcing non-core functions such as HR, payroll, IT, and finance: Explore outsourcing for non-core functions like HR, payroll, IT, and finance to specialized providers.

4. Eliminate non-essential expenses and review company policies to ensure spending aligns with business priorities: Remove unnecessary costs and review policies to ensure expenditures match business objectives.

5. Adjust service levels and expectations in support functions and administration to better align with cost-saving objectives: Align service levels and expectations in support and administrative roles with cost-saving goals.

6. Temporarily suspend non-essential sales activities such as participation in trade shows or servicing low-value customer accounts: Pause non-critical sales activities like attending trade shows or managing low-value customer accounts.

7. Identify and eliminate activities that do not contribute to value creation, reallocating resources to more productive tasks: Identify and remove tasks that do not add value, reallocating resources to more beneficial activities.

8. Standardize workflows and processes to improve efficiency and accelerate decision-making: Implement standardized processes to enhance efficiency and expedite decision-making.

9. Clarify roles and responsibilities within the organization to eliminate duplication of efforts and improve accountability: Define roles and responsibilities clearly to avoid duplicated efforts and enhance accountability.

10. Conduct a thorough assessment of organizational capabilities to identify areas for improvement or skills gaps: Assess organizational capabilities comprehensively to pinpoint areas needing improvement or skill deficiencies.

11. Reevaluate Key Performance Indicators (KPIs) to ensure they align with strategic objectives and prioritize bottom-line performance metrics: Review KPIs to ensure they reflect strategic goals and emphasize bottom-line performance metrics.

WORKING CAPITAL:

1. Optimize inventory levels to prevent overstocking of slow-moving items, reducing carrying costs and improving cash flow: Fine-tune inventory levels to avoid excess stock of slow-moving items, thereby reducing storage costs and enhancing cash flow.

2. Review safety stock levels to align with changes in demand patterns and minimize excess inventory: Reassess safety stock levels to match fluctuations in demand and minimize surplus inventory.

3. Negotiate payment terms with both customers and suppliers to optimize cash flow and improve liquidity: Bargain payment terms with customers and suppliers to enhance cash flow and liquidity.

4. Take advantage of government stimulus programs or incentives available in different countries to support working capital management: Utilize government incentives or stimulus programs to aid in managing working capital on a country-specific basis.

5. Streamline invoicing processes to expedite cash collection and minimize delays in receiving payments: Simplify invoicing procedures to accelerate cash collection and reduce payment delays.

CAPEX:

1. Prioritize capital expenditures (CAPEX) that are essential to the core business operations, postponing or canceling non-essential investments: Give precedence to CAPEX vital for core business operations, delaying or canceling non-critical investments.

2. Maximize the utilization of existing capital investments before considering new expenditures: Utilize existing capital investments to their fullest potential before contemplating new ones.

3. Assess the manufacturing footprint to identify opportunities for consolidation or optimization that can reduce costs and improve efficiency: Evaluate the manufacturing footprint to find consolidation or optimization opportunities for cost reduction and efficiency enhancement.

4. Explore options to divest underutilized manufacturing facilities or spin off non-core assets to streamline operations and unlock value: Investigate options to sell off underused manufacturing facilities or separate non-essential assets to streamline operations and create value.

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