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Fundamental Change is Sometimes Necessary for Business Survival





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 ensures peak efficiency in existing processes and keeps them at peak performance 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 rely on hard work and improving the existing business before they fail. Business improvement is all about laying foundations, tweaking the system and improving.

Fundamental change is a more radical look at the whole operation but it also needs care to avoid throwing the baby out with the bathwater by looking hard at the business and what needs to be preserved in order to survive and grow in the future. 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 example in a downturn it is an understandable reaction for a business to trim its costs when it may be better to have an in-depth look at its business model 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 examined the business in depth and established that there was a market for its products given some changes, the adviser proposed two fundamental solutions to cut 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.

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

In a turnaround situation fundamental change may involve such things as radically changing the accounting system from a costly enterprise management system, which depends heavily on everybody knowing and doing their job perfectly, to a more simple order processing and accounting system that takes things back to more manageable basics.


About Author Alison Withers :

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. <a href="http://www.rescue.co.uk" target="_blank">http://www.rescue.co.uk</a>


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Article Added on Friday, November 26, 2010
LD
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