How Forecasting Can Help to Turnaround Your Business During Troubled Times
Major Points of the Article
Forecasting can help prevent disaster in your business.
It is best to forecast for good and troubled times.
If troubled times are already here, turnaround strategies can save your business.
A business growth consultant can provide an un-bias growth plan to fix your business.
Be it small, medium or a large business, forecasting can be a great way to project into the future for your business. But, once you have the forecast what can you do with it?
Typically, a forecast will show healthy growth for your business with a cash surplus. This cash surplus is great and we think, let’s increase our salaries, buy a new piece of equipment, bring on another employee and more. However, that is not always the case as sales and demand can go up and down. The forecast is not 100% accurate and troubled times could be ahead.
Troubled times are common amongst businesses and can be corrected if caught early. However, if you respond too slowly, then a turnaround strategy is required to accelerate the growth back to a healthy state.
Forecasting Is Only One Piece
As forecasting is not 100% accurate, it is important to establish what can happen if things go wrong, such as a slow market, new innovation in the market, and more. So while you can forecast for good times, you should also forecast for bad times. If you do this, then you will not be surprised and ready for any future changes in the market.
Forecasting for positive and negative times
Starting with forecasting for positive times, you can establish what will happen if everything is good, remains constant in the trends and more. You can then plan out your future with increasing salaries, investing in new tech, expanding into new regions and more…
Forecasting for negative times, is very much “what if” this happens or that happens and is very specific to your business. Some examples of “what if” scenarios could be:
What if we had a 20% decrease in sales for the next 6 months?
What if we lose one of our business partners?
What if we lose 2% market share?
What if we can no longer sell one of our products?
And many more to consider…
By factoring in these situations, you can forecast how your revenue will be affected and how it relates to your overall profits. If these situations occur and you still make sizeable profits that is excellent, but if you end up making significant losses then this is something to be very concerned about.
If you have projected significant losses, then it’s not too late to be prepared. Consider what you need to maintain your operations and still make a profit and create a plan of action. Some items you might consider
Reducing your costs
Alternative manufacturing or suppliers
Negotiating new deals
Turnaround Strategy During Negative Growth
Perhaps it is too late and you are currently experiencing negative growth with no end in sight. If so, then you should consider getting experienced business growth consultants that can provide a tailored turnaround strategy. They will review your business and determine the ways to improve it while increasing your growth. It is important to have an external consultant in these situations as they are unbiased when reviewing the business; essentially fresh eyes that will see more opportunity for the business owner.
Typically the steps involved with a turnaround strategy are:
1. Reviewing any debt the business has and correcting it
Often businesses can slip backwards in their growth because they have leveraged too much debt to grow the business or have used debt as a short term fix for a long term problem. These types of debt can be difficult to correct as short term fixes usually have high percentage rates, and the business ends up chasing repayments rather than paying it off.
Often seen as quite scary, as employees fear losing their jobs, it is a necessary step to evaluate the productivity and necessity of each cost. It is more than just the cost of an employee. It is the rent, utilities, outsourced service providers and more. In some cases, cost-cutting can reduce costs by more than 50%, increasing profit margins and bringing back positive profit growth.
3. Sales & Marketing
This should be reviewed, improved, and tracked, as the marketing expense could be too high or the sales process is not converting as optimally as it should. Long term relationship management should also be reviewed as there is considerable value to be had from previous clients.
4. Diversification & Expansion
Once sales and marketing are healthy (or sometimes before), the next stage to consider is diversification and/or expansion. Diversifying into new product lines or services will help keep your business growing as your customers will always be interested in better products and more efficient services. Essentially, if you don’t do it, then your competitors will and take your customers with them. Similarly, an expansion opens up a new region of potential customers, and if you don’t do it, then your competitors will and take your customers with them.
Simple Yet Complex
This 4 step process, although on the surface looks simple, it is in fact more complex and hence why you should seek a business growth consultant. They are unbiased to your business and will provide the turnaround strategy you need to re-grow your business. Otherwise, if you are experiencing healthy, positive growth, now is the time to accelerate that and push your business growth even higher.
If you have positive, neutral or negative growth, a business growth consultant can provide significant improvements to re-grow or accelerate the growth of your business. Consider Paradelta Strategy, a business strategy and brand equity building company that specialises in this area. In fact, over the years, we have helped businesses across Australia to grow and expand, nationally and internationally. To get assistance with your business, simply email us at email@example.com or schedule a no-obligation discovery call here.