Don’t miss out on this Fasttrack episode: Make the most out of your assets and drop underperforming business units. This podcast episode is geared at helping you to remove the noise that usually tries to keep us from making critical decisions to optimize the existing business. Just think of how people like Henry Ford, Robert Bosch or even Allan Sugar managed to handle quite some unfavourable situations and turn their business activities into a massive success story.
I will share more tips on Twitter @capbartsch more insights on how to turn around underperforming business units. In the past managers often complain about management consultants providing only a blue print on how to get rid of staff and to get rid of the businesses. It is not an easy task to restructure a business and rebuild the trust in the minds of business partners. Suppliers often distrust a financially weak business and refuse to sell to it. This is due to some crazy insolvency laws that put suppliers at a considerable risk of suffering additional loss in case of a company being forced to close its doors for ever.
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Transcript on how to handle underperforming business units
So today we’re going to talk about making the most of your assets and dropping underperforming business units. Business units can be a subsidiary, a separate company, you have a settlement product.
Let’s say you have in your business two different products and one product is selling very well and the other one just isn’t selling. You have to look at why it isn’t selling. Is it an issue with market or the marketing? The price could be an issue for the buyer if the pitching is not done properly. Is it maybe the sales team that’s not properly doing their job?
Get behind the truth why it’s an underperforming unit
You have to find out and try to really get behind the truth why it’s underperforming. If you see that you can not adapt it or improve it, so that it actually picks up again, then you have to make a serious decision to drop that business unit. It’s especially an issue as well in today’s times that many companies are keeping far too long and underperforming business unit. It is costing them revenue and massive resources. This depletes their financial reserves so that in a crisis, they don’t have the reserves and then they eventually go out of business.
The right product that clients want
So, you want to make the most out of the positive assets, whether it’s your staff that has the most positive attitude, the willingness to learn and improve their skills. The unit might have some products being sold very well. They have a future for the long term because of that up to date technology. Its what their customers really want and the customers are actively telling us that they want it and they wouldn’t exactly in the way that we providing it. That’s a good message for us. So, that’s an asset that we want to keep. The same thing is that say you have an asset where you are you have an aircraft or you have a boat, you have trucks.
Any kind of asset, whether it’s a physical, it’s a legal thing whether you’ve got patents, trademarks, Web sites, Web domains and all kinds of stuff that somehow could eventually be a liability or cost or something that’s wasting our energy, whether it’s staff time, when it’s our personal time as employers as well as managers.
Which product really has a profitable future
Hence, we need to see what’s really got a future. And when do we have to really cut and where we have to build up? Because even if we cut a business unit that’s underperforming, the people who are in that business unit might be better set up to work on a different business unit instead. Reallocate them to a completely new business unit, new business product, new business idea or anything else service. If we put them there, we don’t have to lay them off.
It’s just about seeing how can we use these assets in a better way, even if it means as well, maybe providing them better equipment. Especially now when we’re talking about home office so much. If if you’ve got a desktop that doesn’t really fit and it’s already outdated and it’s not working properly, maybe you have to migrate. You’ll maybe have your marketing team still on your sales team still working on an outdated Windows system. You have maybe a linux system that they can’t really handle, then you should honestly move them onto a Mac or maybe a different system. Train them! Provide them access to online training and other kind of things where you can improve their skills and efficiency.
Redundancies are an uncomfortable decision
But the thing is, nobody usually likes kicking people out of a business. I mean by that sacking people – making people redundant. That’s something you don’t really like, but sometimes you have to do that. That’s a decision that’s very uncomfortable. Some business leaders and some managers like letting somebody else do the dirty work for them. If you have to do that, you have to do it in a proper manner and not behave like some sick monkey. You have to have reasonable humility and you have to have the ability to actually show them that’s not the end of the road.
Because when you think of it, when you are laying somebody off, when you’re sacking somebody, you are impacting them. Maybe you are impacting even their direct family or other people who are depending on them. It could be the grandparents who are in an old pensioners home. Their income is actually paying for the intensive care, because the elderly peoeple are not able to take care of themselves and they need extensive care.
Help them get a new job
Then we are having an impact on things that we have to change and we if we don’t change and everybody loses their job. Then that’s a very difficult situation and we have to find a way to actually head them in. Sometimes we even know somebody who might need them and we can help them get employed by somebody, who is hiring that kind of people. They might even quickly get the new job and have a good chance.
Then we actually provide them a good service because maybe someday later they might come back, whether we need them again, whether we hire them or they even come back as clients. Just imagine if you’ve got somebody who’s leaving your organization and he is quite happy and later on notices that he would like to buy your products or your service. He might start his own company. He needs your stuff, your cars or your transport services.
Your responsibility to handle the underperforming business
It does matter if he’s left in a positive connection and to a positive way of you handling the situation. It’s something that you have to handle and you can’t really outsource to somebody else and do the dirty work. If you don’t do it properly and decently karma will hit you when you least expect it. It’s your responsibility: you are the captain on the ship and it’s your ship. So it’s your responsibility to handle it well. It is an uncomfortable situation but you will grow from that.
On the other hand, can we improve things with existing assets that are working well? Maybe we can even increase the amount of revenue that we’re generating with the clients that we’ve got already. We stand a good chance that we can even adapt the existing products and services to provide additional value. This keeps our clients from going to a competitor or totally jumping out of the product because they are trying to cut costs. That’s something that we will see during the current economic situation in many countries.
Companies do not need as much office space
Some companies are going to just be starting to lay off people. They don’t need to have certain kinds of services. They might even get out of their office space. That’s where we have to find a way as business leaders a way that we are not struck from the list of services and products that they usually need, use and consume.
That’s something and you have to think about and take the time, because it’s a strategic thing, that you have to really get fixed. It’s not an easy thing, especially now when there’s so much volatility in the market. Some things you can not influence. Certain things you do influence and you can influence. You have to have the awareness as well to look for opportunities and know which opportunities you shouldn’t go after, because they are not real opportunities. They are traps.