Spectacular business failures have dogged some of the world’s most successful business people at early stages of their careers yet resulted in no long lasting harm to their public profiles.
Richard Branson, said to be amongst the five richest people in the UK, is a case in point. Branson has launched at least 100 companies since 1966. Virgin Records, Virgin Trains and Virgin Airlines are household names, but who remembers his Virgin Cola and Virgin Vodka – both of which sank without trace? Despite the demise of those brands we still hail Branson as an inspirational business role model.
Branson says that recognising mistakes and recovering are essential skills the successful entrepreneur must acquire, and in the restructuring and turnaround market where I operate, my business antennae are tuned into those company bosses who can show me that an underperforming organisation could be worth saving.
Recognising and accepting that a business is in trouble is often the most difficult step. Unfortunately many business owners waste a lot of time grappling with this issue – or may simply be in denial. Either way the business is paralysed through inaction.
Underperformance is a key indicator that a business could do better and is in danger of collapsing completely. If you treat disappointing figures as an ‘unfortunate blip’ and simply a ‘one off’, then you may be setting the scene for a consistent run of poor results.
Taking time to drill down and examine why the business failed to smash its growth targets is vital. Grasp the time as an opportunity to create a strategy for internal turnaround and restructuring. Offer your business the necessary life support it needs – before the oxygen supply runs out and you need to call in the business paramedics.
To really get under the skin of your business and begin the process of turning it from an underperforming one into an outperforming one you need to five simple steps:
- Ask your senior team for their views on the company performance across a range of areas including operations, planning, sales, marketing and leadership. Make it anonymous and you are likely to get honest feedback
- Ask your senior team to do the same within their different departments so that you gather views of staff at all levels
- Use the information to identify and communicate strengths and weakness
- Set actions, targets and deadlines that address the weaknesses – and stick to them
- Keep driving for improved performances scores and chart its achievements regularly.
This exercise can throw up some surprises –and don’t expect everyone to agree. However, often a senior management team will show their confidence in the growth potential of the business and will have renewed energy to increase profitability.
As a business leader you will have to be self-aware, recognising and accepting that you may have contributed to the underperformance.
Richard Branson has gone on record to say that at Virgin enterprises staff are empowered to make mistakes – and then learn from them.
If you take a leaf out of Branson’s book you too can bounce back in business. Recognising your mistakes – and how you recover from them – is what counts.
By Melanie Hird, director of Seneca Investments (part of Seneca Partners Limited)