Whether you're taking over a company that's failing or creating a fresh start in your own business, turning around a struggling company takes a lot of work.
Where should you start making changes? Which tasks need to be prioritized to make the most impact? And how can you keep customers happy during the process?
Business News Daily talked to two CEOs who have done the in-the-trenches work of turning around struggling businesses to get their best tips.
Be honest about what is holding you back.
"Assess the situation, identify exactly what's holding you back," said Whitney Asher. As the founder and CEO of The Marketing Mixtape, Asher works with musicians who are struggling to grow their careers or make a profit. "Getting to the root of the problem is critical."
The results you are dealing with may be apparent, such as difficulty attracting new customers or not making enough of a profit. But these aren't where the actual problems are happening. If you aren't attracting new customers, you really have a marketing problem. If you aren't making enough of a profit, you probably need to cut expenses.
Ryan Junk became the president of boutique fitness franchise CycleBar when it was bought by Xponential Fitness. "Consumers loved the brand, loved the classes," said Junk. "But when we looked at the operations, the buildout, the return on investment for those franchisees, it just wasn't there."
As president, Junk's job was to identify exactly what made that return on investment so elusive. He discovered that the company had grown too fast without creating a sustainable blueprint for new franchises. "When we acquired the company, there were about 90 locations around the U.S.," he said. "The operation systems weren't in place for that type of growth."
Both Junk and Asher stressed the need to find the root of your business's struggles before making any changes. "Identifying exactly what is holding you back allows you to create a plan and allocate your time, people and money where they will have the biggest impact in the shortest amount of time," said Asher.
Look for ways to simplify.
For many businesses, cutting costs and improving efficiency is a major step toward becoming profitable again. Start by looking at the systems and decisions you already have in place. Rather than taking for granted that you must keep things the same, look for ways to simplify without losing quality.
"We didn't want to lose the premium feel," said Junk of assessing his franchises. So he and his team came up with ways to make small but meaningful changes that customers wouldn't notice.
"These locations were about 3,500 square feet," said Junk. "We figured out a way to shrink the footprint to 2,000 square feet without losing any bikes … We had tile that was being flown in from Portugal for $23 per square foot, and we found it locally for $3 per square foot." Other tweaks, like removing unused DJ booths and improving the sound system, saved franchisees money and simplified the process of opening new locations.
Simplifying can also mean taking care of things in-house that you have been outsourcing, or outsourcing tasks that take up too much valuable time. "Either you delegate or you DIY," advised Asher. Aim to strike the best possible balance between quality, cost and efficiency.
Embrace your strengths.
Asher advises clients to solve problems by focusing on the strengths they already have. "Identify what resources are available – tools, people, education – and identify potential areas where growth is possible," she said. "You can't do everything at once, so you have to identify tactics you can do, using the resources you have, not just ideas."
The people already on your team, for example, may have expertise or skills you can tap into before you bring in an outside consultant. If you need to spread the word about your business, encouraging your loyal customers to refer their friends and family may be faster and more effective than investing in expensive new marketing software.
Sometimes you may find that an outside opinion, new purchase or system overhaul is necessary to solve a problem. But the many times, the resources you already have available can provide at least the beginning of a plan.
"Creative solutions require a bit of ingenuity at times, but every situation comes with potential solutions," said Asher.
Make it easy for your customers.
Many businesses struggle because they have accidentally made it difficult for customers to use their services. Systems that make your work easier may actually require your customer to do too much on their end.
When Junk examined how CycleBar managed sales and marketing, he discovered that the lack of face-to-face contact created barriers for customers who wanted to buy classes.
"If the consumer had a question, they were told to go to the website, even if they were in the studio," he said, describing the system before he came on board. Even customers who wanted to buy a package after taking a class were directed to the website. By not having someone available in person, CycleBar was asking customers to take extra steps, rather than making it easy for them to find out information or make a purchase.
Junk implemented recurring memberships that customers could opt out of, rather than asking them to buy new packages every month. He trained franchise owners to extend studio hours so they could be available to answer questions or make sales. He also hired a team to redesign the website, making it more intuitive to sign up for an account or find information.
Making things easier for customers resulted almost immediately in increased revenue.
"We're up 40 percent on studio revenue ... from when we took over the company in October, and we haven't even fully implemented the website," said Junk
Remember your why.
Though turning things around may require big changes, don't lose sight of the core of your business. The values of your business and the way you make customers feel should stay the same, no matter what you choose to simplify or improve.
For Junk, maintaining the level of service and the luxe feel that customers expected was a priority, even as he cut costs and increased sales. "Everything we did was along the lines of keeping the premium look and feel but making it a little smaller, a little more manageable," he said. "Those types of decisions allowed us to really shrink it but really protect the quality."
Focusing on the core of your business and the customers you want to serve will not only guide your decisions. It will also motivate you to keep going, even if more challenges come up.
"Write down your why," Asher advised. "Think about why you began this company and what's inspiring you ... If you write it down and keep it somewhere visible, it will be a good reminder when things get tough."