41 Things We Did During The Turnaround

I had been mulling over a concise, pithy, and to the point post along the lines of "10 Turnaround Tips For Troubled Times" but then Paul Fabretti ( @paulfabretti ) said this:

@gapingvoid agree. Sick of reading trite "10 reasons why" posts...

So instead I will share with you the full list of things Martyn and I wrote down in a bar in Amsterdam two years into the project when reviewing how far we had come by that point.

I have two objectives in doing this:

1. To illustrate that executing a turnaround is not necessarily straightforward. Yes there are some basics that you need to get right to sort your cash flow and stop the bleeding but turnarounds have two phases: crisis management and comeback. I can give you some crisis tips that should help you stabilise but comebacks are tougher.

2. To emphasise that any successful turnaround is a mixture of good practice, fire fighting, opportunism, and has many factors distinctly specific to the individual business and its individual problems.


Here is the list :

1. Painted the office. Put up pictures. To give staff a positive indication of change.
2. Installed computer system from scratch. Over a weekend. Ourselves. £30k in licences!
3. Merged warehouse & shop floor "line service" teams. 1 headcount reduction (natural).
4. Recruited 2 new admin staff.
5. Moved shop floor onto new 7 day/2 shift pattern.
6. Moved shop floor back off new 7 day / 2 shift pattern after 1 month as a total disaster.
7. Narrowly avoided strike with action 6.
8. Negotiated lower cost overtime pay structure in agreeing to 6.
9. Issued new contracts to all employees together with employee handbook bringing Terms & Conditions in line with current legislation.
10. Customised very old semi scrap metal machine to manufacture a very odd new product for a French customer.
11. Bought a small carton erector / sealing unit to go with 10.
12. Exited 3rd party warehousing and brought all finished goods in house. Huge saving. Meant fundamental reorganisation on shop floor and disposal of museum of old (s)crap kit that came with the acquisition.
13. Exited the "Industrial Distributors" market for our kind of products. Cut c. 100 small customers.
14. Moved to new sub contractor for a critical sub assembly. Halved cost.
15. Moved a key customer(4% of yr 1 T/O) to new more profitable product specification. They got a lower price. We got a wider margin. Win:Win.
16. Renegotiated a key partnership (we license a brand to them & make the product) onto more favourable terms. (5% of yr 1 T/O)
17. Launched what is now our single biggest product with what is now our biggest customer.
18. Ceased production of old "canister" format wet wipes. Resigned £100 k of business on very short notice. Sold production line to a Iranian gentleman. (Cash arriving days before we would have run out!)
19. Negotiated shorter payment terms from 5 of our largest customers.
20. Moved our single largest raw material supply to a new supplier having agreed an earn as you go increasing scale of credit, and lower prices.
22. Moved a further critical mass raw material component to a lower cost and easier assembling format. Saving RM cost and reducing labour time per assembly.
23. Installed ERP system upgrade.
24. Retained and relaunched key export contract on improved terms.
25. Bought a new production line from a Swedish drag racing champion. He had built it himself as a project. Reduced time from first action to finished product on a key margin item from 7 days to 1 day. Also a critical forward chess move in allowing us to move the business. The line it replaced was immovable.
26. Reduced the amount of space we leased from our former parent company as a result of 25 and by knocking a hole in the wall that separated our production areas from our warehouse to allow direct internal access. This also improved productivity by reducing "raw material miles".
27. Resigned a swathe of low margin business (2003 150 skus, 2004 116 skus, 2005 86 skus)
28. Negotiated further price reduction for 20.
29. Renegotiated a contract worth 9% of Yr 1 T/O onto a lower cost specification.
30. Moved a third key raw material item to new supply with longer payment terms although prices slightly higher! Sometimes the term is more important that the price.
31. Started purchasing in regular smaller quantities even though this sometimes meant higher prices.
32. Reduced order backlog from 6% of annual turnover (yes I mean that at any one point in time I had a backlog worth 6% of that year's sales!) to zero. Took nearly 2 years of attrition and steady planning improvements and my almost constant involvement.
33. Customised a small, mothballed machine to make a new format product (for us) and gain a good margin chunk of new business.
34. Bought a new packing machine to go with 33.
35. Began an improvement programme on our largest volume production line. Engineering investment, training, changes to RM inputs to stabilise woeful productivity.
36. Virtually eliminated the need for overtime.
37. Reduced engineering team by 1 by natural wastage.
38. Achieved ISO9001/2000 and BRC Global Standard for Non Food accreditation within 9 months of acquisition.
39. Completely renegotiated contract of employment and terms and conditions with staff and union. Major confrontation. Played VERY HARD and got 98% of what we went in for. A FUNDAMENTAL CHANGE. The single toughest thing we did.
40. Imposed a dramatic price increase on our biggest customer (14% yr 1 T/O) when they refused to give us a firm 12 month commitment. Took them 8 months to resource. They always took so long to pay that this repositioned our cash cycle once they were gone. A big decision, but they had to go.
41. Took a net head count reduction in mid year 2 that totalled 12 jobs ( out of 55) through natural churn (influenced by 39. possible as a result of 40.) and only 1 forced redundancy.

What I don't have on the list is that we re-paid a huge amount of debt, slashed discretionary spend, R&D spend and Marketing spend to the bone. We didn't start actively selling until mid year 3. Up until then it was contract and re-focus. The first profitable month was month 10. We were net in the black and technically solvent for the first time by month 21. To be honest this is not the full list of things we did. There is more. But this is what we wrote down at that one pointas we paused for breath and a cold beer and as this was written live in the moment this is what I share with you here.

But lets be clear. If was complex. It was HARD. And £1 profit for 21 months hard hard graft is not much to write home about, but we got there and look back now only to learn.