When your business is facing financial distress, you need a clear and effective plan to turn it around and recover. But how do you know if your restructuring strategy is working? How do you measure and communicate your progress to your stakeholders? In this article, we'll discuss some key aspects of tracking turnaround progress, including:
Before you start implementing any changes, you need to define what success looks like for your turnaround. What are your short-term and long-term goals? What are the key performance indicators (KPIs) that will show you how you're doing? How will you benchmark your results against your industry and competitors? Having a clear and realistic set of goals and metrics will help you focus your efforts and track your performance.
Define Clear Metrics and KPIs (e.g., EBITDA, Gross Margin, ROE, Cash Conversion Cycle) Set Milestones and Timelines (e.g., phases like stabilization, recovery, growth) Frequent Financial Analysis (e.g., NOPAT, EBIT, and net profit margins) Monitor Cash Flow and Liquidity (e.g., Operating Cash Flow, Free Cash Flow) Conduct Periodic Performance Reviews (e.g., monthly/quarterly progress checks) Engage in Scenario and Sensitivity Analysis (e.g., on revenue and cost drivers) Stakeholder Reporting and Transparency (e.g., IRR improvement, working capital adjustments)
defining the goals will build a light house for your project and will help you navigate your TA easily. this cannot be achieved without identifying the risks associated with each goal and its constraints. risks should be combined with response strategy. one way of defining or identifying goals is by having benchmarks.
One of the most critical aspects of any turnaround is managing your cash flow and liquidity. You need to have enough cash to cover your operating expenses, debt obligations, and restructuring costs. You also need to avoid running out of cash or breaching any covenants with your lenders. To monitor your cash flow and liquidity, you need to prepare and update a 13-week cash flow forecast, a rolling 12-month budget, and a balance sheet. These tools will help you identify and address any cash gaps, optimize your working capital, and negotiate with your creditors.
Fala-se que "Cash é king". N?o está errado. Mas costumo pensar o caixa como "vida" (cash is life!). Porque sem caixa, a empresa definha, morre. Por isso a necessidade de um monitoramento constante. Tal qual um paciente em estado de risco, com batimentos e outros elementos monitorados, para que se tome prontamente medidas em caso de necessidade.
Another key aspect of tracking turnaround progress is evaluating how well your business is operating and generating profits. You need to analyze your revenue streams, cost structure, product mix, customer segments, and market position. You also need to identify and eliminate any waste, inefficiencies, or unprofitable activities. To evaluate your operational efficiency and profitability, you need to use tools such as a break-even analysis, a margin analysis, a customer profitability analysis, and a SWOT analysis. These tools will help you improve your margins, increase your sales, and gain a competitive edge.
Finally, tracking turnaround progress is not only about numbers and data. It's also about communicating your progress and challenges to your internal and external stakeholders. You need to keep your employees, customers, suppliers, lenders, investors, and regulators informed and engaged throughout the process. You also need to be transparent, honest, and proactive in addressing any issues or risks that may arise. To communicate your progress and challenges, you need to use tools such as a dashboard, a report, a presentation, or a meeting. These tools will help you share your achievements, explain your actions, and solicit feedback and support.
Tracking turnaround progress is essential for any business that is undergoing restructuring. By following these tips, you can ensure that you have a clear and effective plan, that you manage your cash flow and liquidity, that you improve your operational efficiency and profitability, and that you communicate your progress and challenges to your stakeholders.
Comunicar, comunicar e comunicar. N?o apenas para stakeholders externos; os internos também precisam estar na mesma página. E n?o se esque?a: comunicamos os desafios, com realidade (sem pílulas douradas), mas também os progressos, que servir?o de gasolina e motiva??o para as novas batalhas que se far?o necessárias.