10 things you can do to kick-start a turnaround

How should one begin the process of turning around a company? Is there a checklist that one can refer to (while keeping in mind that the map is not the territory)? Something like this would have been really helpful when I started out 1 year back. Needless to say, this is a dynamic list.  I tried to put this in order of timing so that you will have a clear starting point. You can use this to begin the journey and change it to fit your needs and your context.

1. Freeze all make to stock orders and investment flow until clarity emerges. Focus especially on all fixed discretionary investments.
2. Identify & put together a SWAT team for turnarounds. make sure at least 1 investor or board member is actively involved in the team.
3. Talk to all the critical info nodes in the company to get a feel for the company mindset and culture first hand. Info nodes can usually be identified through a pareto of email senders.
4. Talk to all the senior leaders to get a feel for who can withstand the intensity of coming months. Make sure they are completely in touch with the reality and severity of the situation.
5. Do a Spring Cleaning. Open up all the closets in your firm so you can identify all liabilities, ticking time bombs and hidden treasures very early in the game.
6. List all customers who fired you in the past 6 months and get quality face time with them ASAP.
7. Create a communication strategy that requires you to update the entire team and key partners every week if not directly then through the info nodes.
8. Communicate with all key suppliers and partners to gain support for the transition plan you and your team put together. Be prepared to spend a lot of time explaining why this plan will work and what kind of preliminary results you achieved with the transition plan.
9. Rigorously question and surface all hidden assumptions that make your company tick. For example, the biggest channel in revenues for my company is direct sales of therapy products. These are marketed direct to customer by a team of independent professional sales agents who are paid within 30 days of making a sale. Each agent carries with her 8–10 of our products on a consignment basis and she accounts for them at the end of every week. On average, each agent sells about 3–4 products per week. The customers pay us in 3 ways: through cash, automatic debit and pension linked pay instrument. In late 2003, when the crisis hit us, the sales split was 25% in cash, 60% in automatic debit spread over 12–24 months and balance in pension linked pay instruments. The revenue is shared 55% to my company and 45% to agents. This means that if 100 products are sold in a week, then we get cash for 45 products, which goes to the agents and leaves us to finance all the fixed operating costs, suppliers through other cash. Sounds terrible right? However, when the channel was started, it was primarily a liquidation route for returns and excess stock from our more profitable TV Sales channel. Under the assumption that TV Sales will be healthy and growing, this was a brilliant move since all the stock is paid for, all costs are covered and TV infomercials have assured that the market price for these products is between 5 to 7 times the cost of sourcing. However, the crisis came about because our TV Sales collapsed in late 2003 and without the support from TV, the direct sales became a burden very quickly.
10. Throw away the book on cost accounting. Cost accounting is for tax purposes. For a company in crisis, except for raw material costs, every thing else is fixed in immediate term more so because you do not have the luxury of time or the power to negotiate from a strong position. In such a situation every extra dollar you can make over and above the cost of materials will go a long way in covering your fixed operating costs. So go for every fleeting opportunity that comes your way. However, make sure that you carefully select the products (because you might end up killing these in the process) and only for new customers, negotiating repeat business with tough customers and any opportunity that might give you a fast return.