Small Business Turnaround - SCAP

1 Published by Soundview Executive Book Summaries 10 LaCrue Avenue, Concordville, Pennsylvania 19331 USA*All rights reserved. Reproduction in whole or part is Your Struggling or Stagnant EnterpriseSMALL BUSINESSTURNAROUNDTHE SUMMARY IN BRIEF If you manage or own a struggling Small - or mid-size Business , youknow how hard it is to stay afloat and turn things around when the goinggets tough. You are not alone. The risk for failing seems to be greater withevery passing year. According to the Small Business Administration, busi-ness failures rose an incredible percent from 1986 to 1996. And busi-ness bankruptcies rose percent during 1996 alone. Marc Kramer takes the process of turning around a Small Business andcompares it to getting back in shape. You didn t lose shape overnight; ittook time. There were good things that you stopped doing, and bad habitsthat you started. Worse yet, you may have cultivated an all-knowing attitudethat erroneously convinced you that you had everything under control.

2 This summary provides practical steps to help your company go fromstruggling and stagnant to growing and prosperous. The first step is to mapout your strategy. This summary will show you how to: put together an updated Business plan, create an operation and launch plan to put change into next step is to implement your strategy. You ll learn how to: get vendors and lenders to agree to reasonable repayment schedules, keep and recruit good employees during the Turnaround , create an effective marketing and sales , once you have begun the Turnaround , this summary will showyou how to: cut costs, boost sales, find the funding you need to move your Business you find yourself struggling to keep customers, make sales, pay ven-dors and Business taxes, this summary will help you take action now to pre-pare for a better 22, No. 4 (2 parts) Part 1, April 2000 2000 Soundview Executive Book Summaries* Order # 22-9 CONTENTSM apping Out Your StrategyPages 2, 3 Write A Business PlanPages 2, 3A Business Plan:Step-By-StepPages 3, 4 Write The Operation AndLaunch PlanPages 4, 5 Implementing Your StrategyPages 5, 6 Write A MarketingAnd Sales PlanPage 6 Develop A Budget AndNegotiate DebtPage 7 Preparing For The FuturePages 7, 8 Find New SourcesOf FinancingPage 8 Keep Moving ForwardPage 8By Marc KramerFILE: Small Business /ENTREPRENEURSHIP 2 Soundview Executive Book Summaries Mapping Out Your StrategyYour company didn t get where it is overnight, andwon t recover instantly.

3 It takes a lot of planning , hardwork, and grit to make the enterprise a success worst thing you can do is hide. You must meetwith key employees and advisors and let them knowwhat is happening. Talk to your customers and vendors,too. They have probably been hearing rumors anyway,and since rumors are often exaggerated, they will bereassured to hear the correct information directly fromthe source. Vendors especially want to know what yourplans are and how they will be paid. You will also needto contact tax authorities if you can t meet your obliga-tions. They will usually do all they can to work withyou. The same goes for your bank if you are havingtrouble paying Business loans on Keys to a Successful TurnaroundYour company has a greater chance of turning itselfaround if:1. The top executive is strong, decisive, and Business , marketing, sales, and operating planshave a narrow agreed-upon Managers are able to handle adversity and bewilling to work long Employees are willing to make sacrifices andwork more than 40 Board of directors and advisors are strong Vendors are Bank loan officers believe in the Quality is job The marketplace needs the company s productsor Management hires experienced counsel andaccountants who understand the Business andturnarounds.

4 Write a Business PlanThe first step to turning around any enterprise is tomap out a plan. planning is essential to , you want to begin the Turnaround by creatingbusiness, sales, marketing, and operations plans. Revisethese plans annually. Those who get in the habit rarelyfail. That s because detailed planning lets everyoneknow where the company is and where it s builds with an updated Business plan. Many Small busi-ness people think of Business plans as something theyneed to draft to raise money. But a Business plan can domuch more than that. It can be used as a realistic view ofthe expectations and long-term objectives of your busi-ness, and can provide a framework within which theenterprise will operate. Business plans help managementclarify, focus, and research the development andprospects of their Business or project; provide a logicalframework within which a Business can develop and pur-sue Business strategies over the next three to fiveTo subscribe:Send your name and address to the address listed below or call us at 1-800-521-1227(Outside the and Canada, 1-610-558-9495)To buy multiple copies of this summary:Soundview offers discounts for quantity purchases of its summaries.

5 Call or write for by Soundview Executive Book Summaries (ISSN 0747-2196), 10 LaCrue Avenue, Concordville, PA 19331 USA, a division of Concentrated KnowledgeCorporation. Publisher, George Y. Clement. Publications Director, Maureen L. Solon. Editor-in-Chief, Christopher G. Murray. Published monthly. Subscription, $ per yearin the United States and Canada; and, by airmail, $95 in Mexico, $139 to all other countries. Periodicals postage paid at Concordville, PA and additional offices. POSTMASTER:Send address changes to Soundview, 10 LaCrue Avenue, Concordville, PA 2000 by Soundview Executive Book Business Turnaround by Marc Kramer THECOMPLETESUMMARYThe authors:Marc Kramer is president of KramerCommunications, which specializes in Internet strategic mar-keting, sales and communications, Business plan development,and project management. Kramer is a professional speaker andlecturer on turning around distressed 2000 by Mark Kramer.

6 Summarized by per-mission of the publisher, Adams Media Corporation, 260 Center Street, Holbrook, MA 02343. 336 pages. $ ISBN1-58062-195-3.(continued on page 3)How Do You KnowYou re in Trouble?Heed these warning signs: Decreasing sales despite a growing market. Customers leaving for reasons you control. Clients claim calls go unreturned. Projects are over budget. Expenses are up while profits are down. Employees doubt viability of the company. Employees say there s no leadership. Staff arrives late and leaves early. Staff meetings are a thing of the past. Taxes go unpaid. Payments to vendors are ; serve as a basis for discussion with third parties;and offer a benchmark against which actual perform-ance can be measured and reviewed. Lack of a businessplan almost certainly dooms a Business to easiest way to start a Business plan is to create atwo- or three-page outline. From this start, you will cre-ate a plan that should be no longer than 25 pages.

7 Ofcourse, before you can begin an outline, you must beable to identify the current status, objectives, and strate-gies of your Business . Those entities will be criticallyexamined to probe existing and perceived strengths,weaknesses, threats, and of the PlanEvery Business plan will include an explanation of thefirm s vision, mission, objectives, values, sales, market-ing, and hiring strategies, competition, and income andexpense vision statement is a snapshot of the businessthree or more years into the future. It describes the com-pany s physical appearance, size, and to keep the statement grounded and accessi-ble. Venture capitalists often have their secretaries scanbusiness plans. If your vision statement isn t clearenough for a secretary to understand, it will never seethe light of mission statement explains what the Business istrying to accomplish. When crafting the mission andobjectives, management must ask: What are the central purposes and activities ofthe Business ?

8 What are its major objectives, key strategies,and prime goals?For example, a food company concentrating on foodfor diabetics might state its mission as To be the lead-ing kidney food company in the United States. The next step is to identify the objectives and goalsthat will help the company achieve its mission. Theobjectives and goals state what the Business needs toachieve in the short and long term. Objectives are cen-tered around financial and market share goals. In mostcases, financial goals are more meaningful than marketshare, unless you are in a niche Business . The strategiesoutline the path the company will use to achieve itsobjectives and most difficult sections to write are likely to be themarketing and sales sections. Be sure your financial pro-jections are in line with industry norms. Overestimatethe time or cost required for product development, mar-ket entry, external support, and raising capital.

9 A goodrule of thumb is to halve sales projections and double thecost and time required to get there. A Business Plan: Step-by-StepHere is the step-by-step process for putting together abusiness plan:Draft an Executive Summary:(1-2 pages) Introducethe entire plan, and explain who wrote it, when, and sure to provide contact information and highlight themost important points you make. The executive summary3 Soundview Executive Book Summaries Small Business Turnaround SUMMARYW rite a Business Plan(continued from page 2)Sample Mission and Objectives StatementThe mission of the company is to provide qualityprepared microwaveable foods to individuals withkidney problems so they are freed from the task ofpreparing their own food. HF will offer a variety ofentrees to meet their special nutritional require-ments and in so doing, make meal planning easier,more convenient, and less stressful. HF s plan is todevelop unique entrees and related foods focusedon kidney nutrition and to market these productsboth domestically and Objectives: 1997-1999 To raise $1 million to finance initial productacquisition and marketing costs.

10 To recruit quality management to build a world-class food company. To develop quality microwaveable shelf-stableentrees. To set up distribution channels and perform sam-ple marketing. To attain name recognition in the kidney commu-nity via targeted marketing efforts and dissemina-tion of educational information. To reach $20 million in Objectives: 2000-2003 To expand penetration into international marketswith help of overseas distributors. To expand the product line to include side dishes,desserts, and snacks. To develop other forms of recurring revenue suchas additional product lines targeted to other nichemarkets. To reach long-term revenue goals of $52 millionwithin five years.(continued on page 4)encapsulates everything into one place. Many investorsdon t read anything but the executive summary on thefirst go-around. If it doesn t make the cut, the plan goesin the trash. Make sure the executive summary Your Mission and Objectives:(1-2 pages) Themission statement tells the reader what the Business istrying to accomplish.