5 tips for leading your company out of a crisis

FAQ

Date:

Category:

Share this article:

Getting out of a crisis is difficult and requires extraordinary measures and great efforts from a company and its people. Since we’re here to help, we’ve listed 5 tips for leading your company out of a crisis or turnaround situation. Read on and make smart use of these tips.

1. Identify (and solve) the problem(s)

How do you know that your company is in trouble? Well, depending on the situation, there are more than 25 different signs of potential distress – as you can see below. Most of the time, troubled companies are dealing with multiple signs or problems at the same time, caused by internal and external factors (i.e. the current COVID-19 crisis) interacting together. Identifying these signs and solving the underlying problems is one of the things you should do first when you strive to lead a company out of a crisis.

Distress signals

  • Declining or negative cash flow;
  • Declining stock price;
  • Regulatory inquiries;
  • Large or unplanned workforce reductions;
  • Increase in outstanding accounts payable;
  • Resignations of key finance staff;
  • Management turnover;
  • Shrinking EBITDA (Earnings before interest, taxes, depreciation and amortization) margin.

2. Find (and retain) talented people

One of the (few) good sides of a crisis is that the opportunity arises to find the next level of talent in an organisation. As a (turnaround) manager, you should look beyond the leadership team for people with institutional knowledge. They know all the ins and outs of the company and are essential to realising the impact of potential changes on the business. Be aware though, in many cases, they are the dissatisfied ones, unhappy with the company’s performance. But because of this, they are willing to point out the painful truths – and that’s just what needs to be done on the road to leading a company out of a crisis.

You should also keep an eye out for people that want to add value and impact. In most cases, you won’t find these people sitting around the table at the beginning, but two or three levels down – waiting for an opportunity to be part of something greater than themselves.

Retaining these people isn’t always about money and bonuses: it’s about figuring out their individual needs and get them involved

Retaining these people isn’t always about money and bonuses: it’s about figuring out their individual needs and get them involved.

3. Concentrate on cash

In general, the board and management of most companies focus on complex, long-term metrics like EBIT and turnover. There’s nothing wrong with that, but unpleasant surprises are waiting when no one is concentrating on cash, especially during a crisis. So, the opposite needs to be done to keep a company financially healthy. The best way of doing this is by finding out which investments are making or burning cash, and by subsequently bringing your business back to its fundamental element of success. This makes it easier to see the actions needed to get back on track in terms of cash flow and steer out of the crisis you’re in.

As a company, you need forecasts with a mid- to longterm view to be able to focus on cash and avoid cash flow-related surprises

By the way: watching your bank balance isn’t the right way of keeping track of cash. As a company, you need forecasts with a mid- to longterm view to be able to focus on cash and avoid cash flow-related surprises. Focussing on an investment with a five-year return while money goes out the door, isn’t the right way either, so concentrating on cash flow is vital.

4. Treat every turnaround like a crisis

Most companies without a crisis mindset, react the same to change: they focus on avoiding risks, and therefore they take small steps instead of leaps to get something done. There’s nothing wrong with this approach in a normal situation, but when in a real crisis, significant action is needed. Companies that treat every turnaround like a crisis and thus have that crisis mindset are willing to try the bold things that could change the trajectory of a company.

If that shows that you’re not moving with – or outpacing – the rest of the industry, then your business plan may be out-of-date

5. Dare to criticize your own business plan

The best thing you can do to avoid distress is to periodically review your business plans and see how the company scores on operational and market performance. Find out where you stand as a company using essential financial and cash flow milestones, and do the same concerning your business and competitors. If that shows that you’re not moving with – or outpacing – the rest of the industry, then your business plan may be out-of-date. Last but not least: don’t forget to look back at your business performance over the past to identify any trends. If you keep missing targets, ask why and most of all: be critical.

Contact us

Contact us and get in touch with our expert business advisors if you need (more) support with leading your company out of a crisis.

This website uses cookies

With these cookies, we and third parties can collect information about you and your internet behaviour, both within and outside our website. Based on this, we and third parties adjust the website, our communication, and advertisements to your interests and profile. You can read more information in our cookie statement.

If you opt for acceptance, we will place all cookies. If you opt for rejection, we will only place functional and analytical cookies. You can adjust your preferences at a later time.

Accept Reject More options

This website uses cookies

With these cookies, we and third parties can collect information about you and your internet behaviour, both within and outside our website. Based on this, we and third parties adjust the website, our communication, and advertisements to your interests and profile. You can read more information in our cookie statement.

Functional cookies
Arrow down

Functional cookies are essential for the proper functioning of our website. They allow us to enable basic functions such as page navigation and access to secure areas. These cookies do not collect personal information and cannot be disabled.

Analytical cookies
Arrow down

Analytical cookies help us gain insight into how visitors use our website. We collect anonymised data about page interactions and navigation, enabling us to continuously improve our site.

Marketing cookies
Arrow down

Marketing cookies are used to track visitors when they visit different websites. The goal is to display relevant advertisements to the individual user. By allowing these cookies, you help us show you relevant content and offers.

Accept all Save

Name

Subtitle
Developer
Location
They are focussed on creating a future-focused and relationship-driven culture, that keeps its promises to you, our team members, and partners.
Xeinadin