Preliminary Turnaround Strategy

Time Frame – 90 days

1. Take control of cash right NOW!

• Must stop the bleeding. Cash conservation.
• No spending without CEO authorization. Down to the penny.
• Hiring freeze
• Checks will only be signed to keep vendors from shutting you off
• Identify hidden cash

1. Forecast cash
   • Similar to budgeting that you do in your personal life
   • Review checkbook and make sure this month’s expenses do not exceed the current bank balance
   • Only pay what you must
   • Selling accounts receivable

1. Find cost savings

• Eliminate departments (Most corporate such as Operations, Marketing, and Accounting. Web Site, etc.)
• Telephone expense, business supplies, advertising, employee reimbursements

 

1. Restructure trade debt

• Professional debt negotiator
• Letters to vendors

 

1. Layoff deadwood and underperformers

• This layoff is about survival
• Sometimes sacrificing good people
• Hard decisions will need to be made

 

1. Collect more money from customers

• Collections at front desk
• Settlement offers before accounts are sent to collection

 

1. Sell receivables

• Notify ABC of situation and make request
• Cash conservation

 

1. Restructure long term agreements

• Supplier or lease agreements
• Debt negotiator

 

1. Restructure long-tem bank debt

• Debt negotiator

 

1. Sell unproductive assets

• Convert these assets into cash as quickly as possible
• Equipment, supplies
• Hulen

 

1. Look at sales and lease back

• Sale and lease back of Ranch property

 

1. Look for other sources of financing

• To be clear, it will be a difficult ride

 

 

Turnaround Plan

 

1. Gather data

• Key staff interviews
• Member suggestion boxes

 

1. Analyze data and create turnaround strategy

• Done quickly
• Solutions are usually obvious and there are usually only a limited number of choices

 

1. Identify cores businesses

• Keep the cash generators and get rid of the cash neutrals and cash sinks
• Group exercise
• Nursery

 

1. Discover your competitive positioning

• Is this a sustainable position?
• How will your retrenchment around your core business affect current competitive position?
• What competitive position would you like to have?
• If a better market position is available, can you make money in it?

 

1. Develop Sales forecast and  sales strategy

• Sensible forecast for club memberships
• Cost per sale analysis

 

1. Redesign your organization and reduce headcount

• Biggest cost savings in a turnaround
• Start with positions in non core businesses
• Scale back management and support positions

 

1. Find Cost Savings

• Nursery
• Group Exercise
• Front Desk
• Advertising

 

1. Develop a personnel strategy

• Plan to motivate remaining troops
• A key technique is compensation
• Compensation based on performance
• Monetary and non monetary rewards

 

1. Develop a funding strategy

• Selling receivables
• Reducing inventory
• Stretching vendors
• Restructuring trade debt
• Leasing companies (on paid off equipment)

 

 

Financial Projections

• Sales forecast
• Staffing budget
• Materials/Cost of Goods forecast
• Expense budget
• Capital Budget
• Cash Flow forecast
• Firm forecast
• Next years forecast

 

 

Major turnaround objectives

 

• Club’s always preserve a positive cash balance
• Club’s can produce cash each month
• Club’s core business position is sustainable

 

Meeting with all key team members to outline the agenda