It happens. From economic recessions to poor-performing product launches, to rising interest rates to changing consumer preferences, and more - it’s not uncommon for even the best businesses to encounter downturns, or to experience poor performance. And, while it may feel challenging in the moment, there are a number of ways to manage a turnaround, successfully remedying the situation while promoting business growth.

Business owners can take many steps to change course and promote growth. But, with all the moving parts, bringing in a business turnaround consultant can give you an edge (and an outside perspective!), expediting progress. Because much of this will be turning around finances to fund further business operations, a Fractional CFO is often a great place to start.

So, what does a successful business turnaround look like? And how can a Fractional CFO help? Let’s chat!

Business turnarounds occur when a company recovers from a financial crisis and achieves better profitability. They can be achieved in a variety of ways, including:

• Creating New Goals
• Eliminating Redundancies
• Reducing Expenses
• Improving Advertising
• Diversifying Product Mix

The goal is to pinpoint the company’s pain points. What are the issues? And what is causing them? Then, formulate a strategy to address and resolve the underlying problems.

It’s important to note, this process isn’t about short-term solutions. It’s about restructuring for long-term success. Shifting priorities to prevent harmful decisions, while mitigating potential future risks to the company.

Completing a successful business turnaround is no small feat. It requires thoughtful strategy and a robust plan, coupled with exceptional leadership. It’s a big lift. You will definitely break a sweat. But the good news is, you don’t have to do it alone.

Here’s how an outsourced CFO can optimize your business.

1. Identify the Problem

Business downturns don’t appear out of nowhere—they result from a problem in your business (internally, externally, or both). But, before you can address it, you must identify it.

A Fractional CFO will identify the issues leveraging your company’s financial statements. Drilling into the income statement, examining revenue, customer and product mix, COGS, and payroll. They will also collaborate with key stakeholders to better understand infrastructure, processes and procedures, and overall company philosophy to determine how these items are collectively impacting the business.

This information will help formulate a plan for improvement, providing an order of magnitude, resulting in primary areas of focus.

2. Cultivate Shared Goals

A shared vision is necessary to facilitate a turnaround. Every team member—both internal and external—must understand your company’s struggles and align with your vision to turn the business around.

Work with your stakeholders, advisors, management team, and employees when talking about future changes. Feedback and buy-in from these stakeholders are paramount to your success.

This path brings everyone into the fold and provides a shared sense of responsibility for turning the business around.

3. Create a Plan

You’ll need an in-depth plan to begin the turnaround process. This means knowing your main problems and the steps required to resolve the issues, resulting in additional liquidity for the business.

A Fractional CFO can support you in several ways, including:

• Developing a Long-Term Vision
• Aligning Financial Goals with Business Operations
• Creating Short-Term Action Steps to Meet Your Vision
• Introducing Improvements to Operational Procedures
• Building and/or Divesting Product Lines

The business turnaround plan developed in this phase will help optimize your business, resulting in better profitability and financial stability.

4. Stabilize the Business

Stabilization is one of the initial goals you’ll have when starting a business turnaround. You must stop bleeding cash, so understanding what expenses to cut or well performing segments to bolster are key.

Fractional CFOs are exceptional in this area. They can analyze your financial records, identifying, addressing, and resolving inefficiencies that have caused reduced cash flow. Examples include:

• Manual Processes
• Position Redundancies
• Inferior Productivity
• Overpaying for Services
• Expenses That Are No Longer Required

The ultimate goal is to stabilize cash flow. More sales won’t help if expenses grow disproportionately. You can’t out train a bad diet.

5. Restore Profitability

Restoring profitability to a business involves a comprehensive approach that addresses various aspects of operations, finance, marketing, and overall business strategy. Key focuses include:

• Cash Flow Management
• Operational Efficiencies
• Pricing Strategies
• Cost Management
• Debt Management

Remember, specific strategies will vary depending on industry, market conditions, and other unique challenges that the business is facing. It's often beneficial to consult with a financial expert, a Fractional CFO, who can tailor the approach to the specific circumstances of the business.

6. Increase Sales

Once you’ve stabilized your business and restored profitability, you’re ready to work on increasing your customer base and improving revenue. Fractional CFOs can help identify many opportunities, such as:

• Diversifying Product Offerings
• Identifying New Markets for Expansion
• Revealing Opportunities for Margin Accretion

A Fractional CFO will look at each of these things (and others) to better determine how they will impact your company’s bottom line (all while performing a proper risk analysis – safety first!!).

7. Stay Consistent

You won’t realize long-lasting results if you fall back into old habits once you see some success. Changing what worked to make things easier or taking advantage of other risky opportunities might be tempting. But listen to me. Resist the temptation.

You must stay consistent with your efforts to keep your business profitable. Veering off course can compromise your sales, your cash flow, and ultimately your business’s viability. Stay disciplined. And ensure you are looking to financial reporting to unlock better decision-making. Doing so will ensure that your business turnaround continues successfully.

Managing a turnaround is no easy task.

The William Stanley CFO Group can help. Contact us today (call, text, or carrier pigeon) to learn more.