How to Develop the Turnaround Plan
12 Steps: Executive Overview
Step 1: Why Businesses Fail
Step 2: How to Know if Your Business is in Trouble
Step 3: Are You Prepared for the Task
Step 4: Turnaround Leadership
Step 5: Organizing Your Turnaround Team
Step 6: Stop the Bleeding (Cash)
Step 7: Problem  Diagnostics
Step 8: Marketing During the Turnaround
Step 9: Developing the Turnaround Plan
Step 10: Down-Sizing Staff
Step 11: Dealing with Creditors
Step 12: Financing During the Turnaround
Disclaimer-Please Read


Critical Care for Companies®

Turnaround Step 9: The Turnaround Business Plan

Why you should read this section

  • You will need a compelling story to convince customers, employees, and bankers to stick with you. This section tells you how to develop that story

  • The Turnaround Plan serves as your roadmap to save your business. You will learn in this section how that roadmap comes together

 “A genuine leader is not a searcher for consensus but a molder of consensus.”

---Martin Luther King, Jr.---

 Executive Summary 

Your goal in the executive summary is to quickly and concisely provide an overview (within 1 to 3 pages) that convinces your target audience to continue reviewing your plan.  Although an executive summary appears first, it should be the last part your write.

The executive summary should highlight key elements of the entire turnaround business plan, including: 

1.   Your objectives for the turnaround. 

2.   Your products or services, with emphasis on their distinguishing features and the market needs they will meet. Mention the products you have discontinued and why. 

3.   Your estimate of market potential and assessment of the competition. 

4.   Your management team’s experience and talent. Point out any management changes. 

5.   How the products will be made, or the services performed. 

6.   Projected financial results compared with pre-turnaround financials. 

7.   How much money you need, and what you will do with it. 

8.   The anticipated return that investors will realize, and when they can expect it. 

Business Description 

This section of your business plan describes: 

1.  The business you are in. 

2.  The product or service and potential customers. 

3.  The background of your business, and the roles of key management   personnel. Include an explanation of the main reasons behind the decline of your business. 

4.  The short and long-range objectives of the business. 

Market Analysis 

This section and the “Marketing Strategy” section are typically the two most difficult for the turnaround team.  Here is where you convince your target audience members that customers will buy your products and services.  Your objective is to convince skeptics that:

1.   There is a market need for your product or service. 

2.   You understand the potential customers’ needs, and your product or service meets them. 

3.   You can sell your product or service at a profit. 

Current and Potential Customers—Discuss the major current and potential customers for your product or service.  Respond to such questions as: 

1.   Who are your major customers? 

2.   Why do they buy (e.g., because of the price, for convenience)? 

3.   When do they buy? 

4.   What are their expectations for price, quality, and service? 

Marketing Size and Trends—Investors and others want to know the current and potential size of the market.  How big will the market be in 5 years?  10 years?  Support growth estimates with industry trends, technological developments, changing customer needs, and other market factors.  Your sources and assumptions should be clearly stated, and they should be realistic.  If you overstate the size of the market or your potential share, investors will question the credibility of the entire business plan. 

Competition—Describe the companies that are your competition and assess their respective strengths and weaknesses, including: 

1.   The market share potential of each competitor. 

2.   How your product or service compares with competitors’ in price, service, warranties, and other features. 

3.   Your competitors’ strengths and weaknesses in the financial, marketing, and operational areas of management. 

A matrix is a good way to present comparative data on the competition.  An objective appraisal of your competition will add significant credibility to your turnaround business plan 

Advantages of Product and Service 

An investor and other audience members want to know what distinguishes your products or services, how they will provide a competitive advantage, and what market needs they will meet.  Therefore, this section should include the following information: 

Description of Product—Describe in laymen’s terms the product or service that you sell or intend to sell, and include photographs or sketches if they would be helpful.  Remember that many investors are not specialists in your field.  Describe the key features of your product or service and its benefits to potential customers and compare them with those of your competition.  Emphasize your competitive edge and demonstrate your understanding of the marketplace.  You should also candidly discuss any limitations of your product or service.  This will make your plan more credible. 

Proprietary Position—Describe your patent or copyright position, or any other means of protecting your technology or obtaining a superior position in your industry. 

Other Barriers to Competitors’ Entry—In addition to patents or copyrights, other conditions can discourage competitors from entering the field.  Discuss these other factors, such as an exclusive arrangement with a distributor or an unusually long lead-time from product or service conception to delivery. 

Research and Development Activities—State the primary research and development activities that will be required to bring your product to market.  Indicate how much it will cost and how long it will take to have a marketable product, and the probability of success. 

Regulatory Requirements—Discuss any regulatory or other approval requirements. 

Product Extensions—Discuss your plans for additional new products or services that will meet changing market needs.  In most cases, these should be an extension of your existing product line or service capability. 

Marketing Strategy 

This section of the plan must demonstrate to prospective investors that you understand how your market should be segmented, and that you have the ability to sell and deliver your product or service effectively to the correct targets.  This is the place to show why customers will buy from your company. 

Target Markets—Identify your target market(s).  It is important to segment and target the market properly—something that new companies frequently overlook.  Concentrating your resources on the needs of a specific segment and carving out a market niche may mean the difference between success and failure. 

Estimated Sales and Market Share—Estimate the market share and sales volume that you think you can achieve over the next 2, 3, 4, and 5 years.  Identify which portions of your estimate represent “hard” purchase commitments, and present this information in tabular form. 

Pricing—Discuss the pricing strategy and policy for your product or service and compare it to that of your competition.  Show how your pricing approach will enable you to: 

1.   Penetrate the market 

2.   Maintain and increase market share in a competitive environment. 

3.   Make a profit. 

Sales Plan—Discuss how and where (currently and in the future) you plan to sell and distribute your product and service. What changes have you made to your previous strategy in the following areas: 

1.   Selling through distributors. 

2.   Selecting and compensating distributors. 

3.   Will you be making any changes to your direct sales force? 

4.   How many salespeople will you need for this new strategy? 

5.   Will they be compensated by salary or by commission? 

6.   What education and experience will you require, and how will you find and attract good salespeople? 

7.   What degree of sales efficiency can you expect? 

8.   How many sales calls will it take to get an order, and how large will an average order be? 

Answering these questions will help you prepare a sound sales plan and determine your sales expenses. 

Promotion—Discuss how you will generate awareness of your product or service among potential customers.  Answer such questions as: 

1.   What is the “image” of the business which you would like to communicate to customers? 

2.   Which promotional activities will you use—public relations?  Advertising?  Trade shows?  Sales incentives?  Promotional literature?

3.   Will these expenses be a large percentage of total expenses?

Remember to always reference your old strategy and describe why this new strategy will have a greater impact on your business success.

Manufacturing or Service Operations 

In this section, describe how you now plan to manufacture your product or perform the service.  What changes are planning? Consider these factors: 

Location—Discuss the location of your business.  Consider the most important cost components, e.g., labor and material costs and availability, transportation, proximity to customers and suppliers, taxes, local laws, and utility costs 

Facilities and Equipment—Describe the facilities and equipment that will be required.  Answer such questions as: 

1.   What will these cost? 

2.   Will you lease or buy? 

3.   What are your future needs? 

Production or Service Operations—Describe the manufacturing process or the method of performing the service, including: 

1.   Production or operating process. 

2.   Production or operating advantage. 

3.   Quality control procedures. 

4.   Breakdown of costs (fixed and variable). 

5.   Organization and operation of the purchasing function. 

6.   Production or operations capacity. 

7.   “Make or buy” decisions. 

8.   Availability of raw materials. 

9.   Potential suppliers and contractors. 

Include a production / operations plan that gives cost information at various levels of operation.  This information will be incorporated into your cash-flow projections. 

Labor Force—Discuss the labor force. 

1.      What are the costs? 

2.      Is there enough labor available with the right skills? 

3.      Will additional training be required?  What will it cost? 

4.      Is the labor force unionized or likely to be in the future? 


Ten Questions About the Business Every Turnaround Business Plan Should Answer

  1. Who are the venture’s customers?

  1. How does the customer make decisions about buying this product or service?

  1. To what degree is the product or service a compelling purchase for the customer?

  1. How will the product or service be priced?

  1. How will the venture reach all the identified customer segments?

  1. How much does it cost (in time and resources) to acquire a customer?

  1. How much does it cost to produce and deliver the product or service?

  1. How much does it cost to support a customer?

  1. How easy is it to retain a customer?

  1. Why will the business be successful this time?

Management and Organization 

One of the major concerns that needs to be addressed in the turnaround plan is a company’s key management team members.  As a result, this section will receive significant attention from your target audience. 

Organization—Explain how your company’s management team is organized, and describe the primary role each team member plays.  If appropriate, use an organization chart.  Demonstrate how team members’ skills complement each other.  Investors are looking for a team with a balance or marketing, financial, management, and production skills, as well as experience with the product or service you are developing. Remember to describe changes that have occurred as a result of the turnaround. 

Key Managers—Prepare a brief synopsis of each key manager, including:

1.      Duties and responsibilities. 

2.      Career highlights. 

3.      Significant past accomplishments that demonstrate ability for the tasks that will be required. 

Include resumes in an exhibit.  Resumes should include sufficient detail for an investor to “check out” each key manager. 

This section should also discuss any apparent weakness in your management team.  Any critical skills missing?  If so, how will this be overcome—by training?  Recruiting?  Outside advisors? 

Compensation and Ownership—State how each person will be compensated (by salary?  Incentive bonus?  Profit sharing?), and what investment each has in the company.  Include a list of key stockholders, with the number of shares each owns.

Board Members—Identify your board members and briefly discuss how each helps in the development of your company.  Indicate any investments board members have made in your company.  ( A young management team might gain credibility by having on its board retired CEOs of companies in similar fields.)  


Fourteen “Personal” Questions Every Turnaround Plan Should Answer

  1. Where are the founders/owners from?

  1. Where have they been educated?

  1. Where have they worked and for whom?

  1. What have they accomplished-professionally and personally-in the past?

  1. What is their reputation within the business community?

  1. What experience do they have that is directly relevant to the opportunity they are pursuing?

  1. What skills, abilities, and knowledge do they have?

  1. How realistic are they about the venture’s chances for success and the tribulations it will face?

  1. Who else needs to be on the team?

  1. Are they prepared to recruit high quality people?

  1. How will they respond to adversity?

  1. Do they have the mettle to make the inevitable hard choices that have to be made?

  1. How committed are they to this venture?

  1. What are their motivations?


Prepare a schedule that shows the timing of activities for the major events of your plan.  It is easy to underestimate the amount of time to complete various tasks, so be realistic. 

Risk Management

This section must include a discussion of risk and how to manage it.  A good turnaround business plan is a snapshot of an event in the future.  That’s quite a feat to begin with-taking a picture of the unknown.  The best plans go beyond that; they are like movies of the future.  They show the business from multiple angles. 

To complete this section, brainstorm potential risks (things that could go wrong and negatively impact the business).  Estimate the probability that this event could occur (#1 unlikely, #2 likely, #3 very likely).  Finally, for #2 and #3 risks, develop a risk mitigation strategy for each (if the risk occurs, what will you do?). 

Financial Information 

You will need to include financial statements and projections for the next 12 months in detail. Then 2-3 years at a higher-level summary. It will be beneficial to include pre-turnaround financial documents as a comparison. Include the following documents: 

1.      Projected statement of operations. 

2.      Cash-flow projections. 

3.      Pro forma balance sheets. 

4.      Breakeven analysis. 

Your projections should be tied to your market expectations.  It is important to state clearly the assumptions you used when preparing the pro forma statements and projections.  Your financial analysis should identify and support the amount of money you are seeking from potential investors and creditors. 

Match the financial analysis up with the risk analysis.  Calculate the numbers for three scenarios: 1) most likely, 2) optimistic, 3) pessimistic. 

How Much Money Do You Need? 

This section of your plan should indicate the amount of money you will need, when you will need it, and how it will be used.  Respond to questions like: 

1.   How much money do you need now? 

2.   How much will you need the next 12-24 months, and when? 

3.   What will you do if you have underestimated the amount you will need? 

4.   How will you use the initial funds? 

5.   What financial structures are you proposing for the financing—i.e., what portions of the funds will be debt and equity? 

6.   What will the terms be? 

Address your plans for cashing out the venture’s invertors—for example, going public or merging.  Investors look at future value and liquidity of their investment.  Some investors, such as venture capitalists, may not take an interest in your company if you do not plan to go public within 5 to 7 years. 

Plan Exhibits 

Include exhibits to provide any additional details that help tell your story.  These might include: 

1.      Marketing Studies 

2.      Patent information 

3.      Photographs or sketches of your product or service 

4.      Resumes of key executives 





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