MELISSA A. CRAIG - PRACTICAL TURNAROUND THINKING

U.S. Treasury, IMF and European financial officials now admit that if they had acted at the first signs of trouble, the cost of fixing the problem would have been $30 - $35 billion instead of $140 billion.  Practical Turnaround Thinkers -- 21st century management teams who use the tools of turnaround management every day -- could have predicted that.  What do we know that the world's finance ministers don't?

The 2005 Bankruptcy Act was written to rein in overspending consumers, but the most current data (12/31/07) show that, rather than buying luxuries, 14% of Chapter 13 filers drained their resources trying to finance their businesses.  Professor Robert Lawless of Univ. of Illinois School of Law spoke to the American Bankruptcy Institute about his latest research.  We recommend that, rather than pushing lenders to weaken credit standards, business owners need to learn how to put the tools of turnaround management to work every day.

 

Hackett Groups reports that 80% of firms are unable to forecast 13-week cash flow within 5% accurracy.

Only one in three can accurately forecast their earnings, due to unknowns in the sales and expense categories. 

Top performers have five characteristics in common:  the simplest of the five is to "develop closer vendor and customer relationships."  The other four require substantial organizational effort.  Management and boards should throw their weight behind these initiatives.    

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How do the mighty fail?  Since hindsight, not foresigt, is 20/20, it's a lot harder to detect early decline than it is late decline. 

Collins provides the five stages of corporate decline. It's not until Stage 4 that management even admits that something is wrong. 

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The name of this blog is Practical Turnaround Thinking and it’s written for 21st century management teams who are looking for practical steps to improve their company’s performance.

Early Warning Signs are simply financial measurements and ratios. The numbers that make up the measurements and ratios come mostly from current accounting system reports. These measurements and ratios are extracted regularly and graphed; the trend line is monitored over time. The curve is either moving up, flattening out or heading downward.

What is renewal? It’s based on the verb, to renew -- to make new again; to restore to existence: reestablish, recreate, rebuild, revive, resuscitate; to restore to fullness or sufficiency.