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Turnaround Coaching: Who Can It Work For And Who Needs More?

Business Turnaround Coaching: Who Can It Work For And Who Needs More?

What is Business Turnaround Coaching?

Business Turnaround Coaching is halfway between traditional business coaching and turnaround management.

Traditional business coaching works very well for many growing businesses and is often a six months or twelve months improvement project as the coach and business owner work together. You would systematically work through your business, improving areas of weakness and testing new ideas in areas of strength.

Turnaround management is much more dramatic. It involves a turnaround specialist taking over management control of a struggling business that is on the verge of failure. It’s normally full time and the duration depends on the severity of the problems and the size and complexity of the business.

Business Turnaround Coaching recognises the need for fast improvement in a business but is less intrusive than turnaround management but much more intensive than traditional business coaching. For example, my 30 Days Business Coaching Boot Camp has daily contact with the business owner for 30 consecutive days Monday to Friday to maintain focus and accountability on the most important improvement efforts.

What Businesses Are Suitable For Business Turnaround Coaching?

You can think of a business going through a few different stages:

  1. Start-Up including pre-start-up
  2. Fast Growth
  3. Steady Expansion
  4. Maturity
  5. Decline

Businesses evolve gradually through these stages. Traditional business coaching is focused on stages 2 and 3, dealing with the problems caused by growth and the need to recruit and manage staff and develop systems.Failure to do this will cause the business to struggle.

In the early stages of stage 4, maturity, the business is very settled. Growth is negligible and the business is in a steady state, doing what it’s good at doing. Gradually markets change, competitors get more aggressive and new technologies make existing products and processes obsolete. Sales and profit levels come under pressure and the management team need to accept that they must change and adapt.

This can be hard. Business as usual was easy and now the business owners can get stuck and unsure what to do for the best.

  • The right actions can start a new phase of growth.
  • Wrong turns can move the business into decline as it wastes resources either following the wrong strategies or ineffectively trying to execute the right strategies.
  • Doing nothing also moves the business into the decline phase because the business environment is gradually becomes more hostile as it is moving against the business and “the usual way of doing things.”

At this stage, you have what I feel is the natural area for people who specialise in helping business owners who are stuck and in need of early stage turnaround.

Turnaround Coaching Or Management As Defined By Profitability

The diagram below shows business performance over time in terms of profit.

Business turnaround needs by profitability diagram

Decline, recovery or collapse

Business A experiences a profit dip but recognises the problem and gets whatever help is needed to take the correct actions to turnaround this short performance problem. In practice, the turnaround is likely to be much faster but I wanted to keep the diagram simple and without the optimistic hockey stick growth pattern.

Business B either delays taking the necessary actions, does the wrong thing or does it ineffectively. The performance problems deepen, and if profits turn into losses, the business starts moving towards balance sheet insolvency where liabilities exceed assets.

Business B has problems that are probably beyond the turnaround coaching process. It will need the full time commitment of a turnaround manager to make the necessary changes quickly enough.

Business C has gone past the point of no return. The balance sheet shows a large deficit of liabilities to equities and the business has no viable chance of trading out of its difficulties. The final cash flow crisis arrives and the business is unable to pay the staff and key suppliers.

There is middle ground between A and B, the closer to A, the more suitable is turnaround coaching, the closer to B, the more suitable is turnaround management.

Conclusion

Business turnaround coaching is effective for businesses that are stuck, under-performing but still profitable or making small losses. The bigger the problem, the less time available to fix the problem, the more turnaround management is needed.

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