A turnaround refers to the a company’s successful economic and strategic turnaround following a critical situation. The aim is to reduce losses, restore financial stability and position the company to remain competitive in the long term.
A turnaround may become necessary if a company experiences a prolonged decline in turnover, incurs high costs, develops liquidity problems or is no longer able to respond adequately to changes in the market.
Typical signs that a turnaround is needed are:
- ongoing losses
- falling turnover or market share
- a short financial runway
- increasing liquidity constraints
- high fixed costs
- Loss of key customers
- unprofitable products or business areas
- an unclear positioning
- outdated technologies or processes
A turnaround usually takes place in several stages:
| Phase | Typical measures |
| Analysis | Examine the causes of the crisis, the financial situation and the market position |
| Stabilisation | Ensuring liquidity and resolving particularly urgent problems |
| Restructuring | Adapting costs, processes, organisation and services |
| Reorganisation | Revise the business model, target audience or positioning |
| Growth | strengthen profitable business areas and tap into new opportunities |
Possible turnaround measures include:
- reduce unnecessary costs
- Adjust prices and revenue models
- discontinue unprofitable products or projects
- Simplify and automate processes
- tap into new customer groups or markets
- revise the product range
- Reorganising responsibilities within the team
- raise additional capital or secure interim financing
- involve strategic partners or investors
A successful turnaround requires clear priorities and swift decision-making. Short-term cost-cutting measures alone are often not enough. The company must also examine why the crisis arose and what long-term changes are necessary.
For start-ups, a turnaround might, for example, involve adapting the business model, pivoting, or focusing on particularly profitable customer segments.
A common mistake is to put off necessary changes for too long. The later a company reacts, the less time and financial resources it has available for implementation. At the same time, cost-cutting measures should not be so severe that core competencies, product quality or future growth opportunities are compromised.
innoWerft helps founders to critically review business models, financial indicators and market assumptions, to prioritise suitable courses of action, and to develop new strategies for financing, positioning and sustainable growth.