leftbottomKe’Onna Yates
10/7/2020
890000Ke’Onna Yates
10/7/2020
1000077724015000150876079500left150001508760exam 1
MGMT 448 – SMALL BUSINESS CONSULTING
890000exam 1
MGMT 448 – SMALL BUSINESS CONSULTING
In the book, The Turnaround Experience, Saving Troubled Companies chapter 1 expresses the signs a company should notice when it’s time for a turnaround. A turnaround is a process of bringing a company’s profitability back up from the dirt when sales start to drop. Some causes of downfall within a business can be both external and internal for example, mask mandate, Covid -19 restrictions, bad management, or the company’s image. To keep up with the company’s health it is important to do daily, weekly, and monthly examinations. Hiring a turnaround professional is very beneficial to a company as they can study the business and the reports to see what the business needs to change or do to be saved if the issues are caught before it’s too late.
I once worked at a small local business and as an employee noticed that the business was not doing well. How did I notice this very early as a cashier before the owners and managers of the business? Sometimes there can be so much going on behind the scenes that the warning signs bypass the managers. According to chapter 2, keeping a graph of the movements of the financial waves will show how the company is doing and will give a visual of the business’s growth or drop. When it comes to the sales volume keeping the data from the previous week month, years and holidays is important because it shows if there is a pattern in sales depending on the day and times. I also worked at a shoe store in the mall called Journeys, and I remember my manager mentioning that certain days and holidays were busier than others. She would pull up a chart that had the sales from the previous three years of Christmas in a row and we noticed one-year sales were not as well as the previous year. We had to figure out as a crew what could have caused that and what should we do to boost the sales we missed out on. We then believed it could’ve possibly been the inventory of shoes we had displayed that was not what people were specifically looking for, we brought in more trendy styles and sold shoes like crazy even running out of sizes.
I noticed when the local boutique was searching for ways to bring in cash flow that it seemed as if they thought more was better by giving out gift cards when in fact it was only digging up a hole for them. When reading chapter 3 I noticed that this business did some similar suggestions such as extending accounts payable by cutting off the phone line to the business. I believe that his book would help the small business out with simple suggestions such as controlling outgoing requisitions and much more. I noticed that the company would buy a lot of their supplies through Amazon where it would be in small quantities for a higher price than a website that offered bulk items. This boutique sold consignment products along with the handmade back of store-made items. Once this business saw sales dropping, I think it would have been wise to make the sacrifice of dropping prices and having dealt for the inventory that was made within the brand to bring in the needed cash or selling their inventories such as their children’s felt foods in sets.
From the case Classic Fixtures & Hardware Company their estimated income and balance sheet for 2008 did not meet their actual outcomes for 2008. The company highly relies on its bank for loans, but things started to get out of hand whenever inventory rates were higher than their capital. As sales started to drop Classic Fixtures was obligated to borrow money from the bank thinking that the more the better. Chapter 4 talks about situations like this cutting costs and increasing sales is a focus point. Classic fixtures spent a lot of money on inventory and had so much leftover because their sales were slow. Using variable cost over fixed cost will also help improve the company’s expenses.
Keeping up with the balance sheet is an important tool that the turnaround professional should use for many different reasons as it shows accounts receivable to determine what should be done with collectible, non-collectible, and doubtful accounts. The inventories within a business can at a time become useless if they start to pile up and not move when sales slow down. Some inventory can be sold but others can be devalued resulting in a loss for the company. The balance sheet will give more information about the assets, accounts payable, and ratios showing the trouble of the company.
Chapter 6 talks about theft and fraud. This is a serious crime for individuals and all who take this action have different reasons on why they make do this. As a turnaround expert, it is important to see if this could be a cause of a business shifting left. The book gives an example of how one can get caught. Someone was touching the money box, so they decided to use a powder die and once the individual went to touch the money for the seventh time, he no longer showed up to work and was caught red-handed when the ink was witnessed all over his hands. Keeping up with transactions, mismatched payees, and noticing unusual employee circumstances are ways to keep your business safe from fraud.
There are different ways you can measure the productivity of the company. Chapter 7 gives measurements such as the efficacy calculation which is the ratio of the output and input. There’s a measurement of inefficiency that measures with scrap the production that cannot be sold. Waste is leftover material that can at times be reused depending on what the waste is, and rework. I honestly did not understand this chapter very much but to the best of my understanding this chapter is figuring out the company’s biggest downfalls of the business to move on to the solutions to turn the company around.
References
Kester, C., & Stephenson , C. (2015). Classic Fixtures & Hardware Company.
Schopflocher, T. F. (1995). The turnaround experience: Saving Troubled Companies. Detselig Enterprises.
