Business Survival Sometimes Needs Fundamental Change

Copyright (c) 2010 Alison Withers

Any successful business should expect to constantly monitor its activities and modify them where necessary to improve its efficiency and its various offers.

Continuous business improvement does two things: it optimises existing processes and keeps them optimal by continually updating them.

But on its own, especially when there are significant challenges in the wider economy, such as the current global economic downturn, continuous improvement may not be enough.

Such unexpected challenges can plunge a business into difficulties where its survival may be at stake and this may mean looking at a fundamental change to the way it operates.

Too often businesses struggling to survive, are characterised by hard work and trying to improve the existing business model before they fail. Business improvement is all about laying foundations, tweaking the system and improving.

Fundamental change involves a radical look at the whole operation but it must also be done carefully, taking a hard look at the business and establishing what needs to be preserved for survival and future growth, to avoid throwing out the good along with the bad. However, if a business attempts the growth phase before bedding in new foundations after fundamental change it will reinforce any problems that had not yet been sorted out.

For instance, it is an understandable reaction in a downturn for a business to trim costs although it actually may be better to look at its business model in depth and be open to more radical changes.

This can all seem too much when a company's directors are struggling to keep a business afloat at a difficult time. It is possible to be too close to the problem, however, and a combination of worry and a sense of urgency is not ideal for taking an objective look at the whole business model.

Here is where appointing a business turnaround adviser could make all the difference between failure and success. An adviser is motivated to help a business client succeed and expects to work with committed managers and staff, but is not so immersed in the daily details of the operation and can therefore look at all aspects of the business, identify what is viable, identify the processes draining the company and what actions can be taken.

In a recent case, a business turnaround adviser was brought into a manufacturing company to help it through difficult times when orders had dropped dramatically. The company occupied an expensive factory with consequent high overheads.

Having thoroughly examined the business and established that with some changes its products did have a market, the adviser proposed two fundamental solutions for cutting back on overheads: that the company reinvent itself as an assembly house with outsourcing production of components and that it should also get rid of its fleet of delivery vehicles and outsource that too.

They both provided the company with much more flexibility by cutting back its fixed costs in favour of variable costs. It could then focus on what it was good at, which was developing good products.

Fundamental change in a turnaround situation may include various things including radically changing the acounting system from an expensive entreprise management system, which depends heavily on avaryone knowing and doing their jobs perfectly, to a simpler order processing and accounting system taking it back to more mangeable basics.


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From time to time even a successful business that is in the habit of constant monitoring of its activities to ensure continuous improvement may need to undertake fundamental change, as business rescue adviser Tony Groom at K2 business rescue tells writer Ali Withers.