How To Create A Profitable Turnaround Plan In 5 Easy Steps
Learn how to create a profitable turnaround plan in 5 easy steps. From stabilizing cash flow to rebuilding your sales pipeline, this guide offers actionable insights and book recommendations to help struggling businesses recover and thrive.
Running a startup is thrilling, but it’s also risky. One day, you’re riding high on growth and success; the next, you’re facing a cash crisis, client churn, or an empty sales pipeline. When the tough times hit, what separates successful founders from those who fold is their ability to act decisively and create a turnaround plan that stabilizes the business and sets it on a path to profitability.
I’ve been there. I’ve made mistakes managing cash, lost key clients, and faced tough decisions. But I’ve also helped founders navigate these challenges and emerge stronger. A profitable turnaround isn’t about magic or luck—it's about focus, discipline, and following a proven framework.
Here’s my five-step turnaround plan, designed to stabilize your business, regain momentum, and create a foundation for long-term profitability. Each step comes with actionable insights and a book recommendation to guide you further.
Mike Parsons
Step 1: Cash Flow is King (First 30 Days)
When your business is in trouble, the priority is survival. Cash flow is the oxygen that keeps everything running. Without it, you won’t have the resources to fix anything else. Yet, many founders don’t manage their cash as they depend on it—and I’ve been guilty of this, too.
What To Do:
The first step is to get a clear understanding of your financial position:
- Audit your expenses. Identify non-essential costs and cut them ruthlessly. Subscriptions, office perks, and travel can often be scaled back with minimal impact.
- Collect all outstanding invoices. Reach out to clients and offer small discounts for early payments if needed.
- Delay payments where possible. Negotiate extended terms with vendors to conserve cash.
Once you’ve done this, calculate your cash runway—how long you can operate before running out of money. From there, track your “back to profitability” moment; their revenue exceeds expenses. Your goal is to hit this milestone before the runway ends.
I’m always shocked by how much waste hides in plain sight. Auditing the company credit card often reveals surprising opportunities to save. A clear cash runway is the most critical crisis tool—it lets you prioritize and act decisively.
Book Recommendation:
Profit First by Mike Michalowicz is a game-changer for managing cash flow and ensuring profitability.
Mike Parsons
Step 2: Secure the Clients You Have
When times are tough, losing more clients can be catastrophic. Retaining your current clients should be your next priority. They already know and trust you, which makes it easier for them to work with you and new prospects. Plus, happy clients can open doors to referrals and testimonials.
What To Do:
- Assess client satisfaction using a tool like Net Promoter Score (NPS) to categorize clients:
- Detractors: At risk of leaving. Address their concerns immediately.
- Neutrals: Satisfied but not loyal. Strengthen your relationship with them.
- Promoters: Advocates of your business. Ask for referrals or testimonials.
- Over-deliver on your promises. Exceeding expectations can secure renewals and upsells.
- Be proactive in communication. Show clients you’re invested in their success.
I’ve found that NPS is a simple yet powerful way to understand where you stand with your clients. Focusing on turning neutrals into promoters and addressing detractors’ concerns will reduce churn and create new opportunities.
Book Recommendation:
The Trusted Advisor by David Maister is essential reading for building strong, trust-based relationships with clients.
Mike Parsons
Step 3: Restart the New Business Engine (30-90 Days)
Once you’ve stabilized your cash flow and retained your key clients, the next step is to reignite your sales pipeline. In a turnaround situation, this means focusing on quick wins—clients with urgent needs ready to act now.
What To Do:
- Identify prospects who have immediate pain points that align with your offerings.
- Reach out with tailored solutions that emphasize speed and impact.
- Offer pilot projects or more minor engagements to reduce barriers to entry.
- Leverage your network. Warm introductions often move faster than cold outreach.
In my experience, urgency is the most critical factor when restarting a pipeline in a crisis. Find clients who need your help yesterday. Tailor your pitch to their needs and focus on delivering fast, measurable results.
Book Recommendation:
High-Profit Prospecting by Mark Hunter is an invaluable resource for quickly finding and closing high-value clients
Mike Parsons
Step 4: Optimize for Efficiency
Cutting costs is never easy, but stabilizing a struggling business is often necessary. Every dollar saved can be reinvested into survival and growth. This step is about streamlining your operations so that every resource is focused on what matters most.
What To Do:
- Cut deep and cut fast. If layoffs are unavoidable, be decisive and offer generous severance to reduce uncertainty.
- Review office leases. Can you downsize or sublease part of your space?
- Eliminate non-core services and activities that aren’t directly contributing to profitability.
One tactic I’ve used successfully is offering employees who choose to leave early 1.5 months of pay for immediate offboarding. It reduces ongoing costs faster while providing financial security to those impacted.
Book Recommendation:
Traction by Gino Wickman provides a clear framework for streamlining operations and aligning your team.
Mike Parsons
Step 5: Build for Long-Term Stability
Once the crisis is under control, it’s time to consider the future. A profitable turnaround isn’t just about fixing what’s broken; it’s about building a resilient, scalable business. Stability comes from diversifying your client base, revenue streams, and expertise.
What To Do:
- Identify a second niche that complements your core offering. This reduces risk and opens up new revenue streams.
- Diversify your client base. Avoid relying too heavily on a few major accounts.
- Build systems and processes that prepare your business for growth.
Owning a second niche has saved many businesses I’ve worked with. For example, if you specialize in software development, expanding into cybersecurity or SaaS integrations can create a valuable safety net.
Book Recommendation:
Good to Great by Jim Collins offers timeless insights into building a sustainable and resilient company.
The Bottom Line
A profitable turnaround isn’t about waiting for luck but taking decisive action. By focusing on cash flow, retaining clients, rebuilding your pipeline, optimizing for efficiency, and planning for the future, you can stabilize your business and set it on a path to success.
Crises are defining moments for you as a founder. You handle these challenges, shaping your company’s future and leadership legacy. Take this plan one step at a time, and remember: you’ve got this.
Now, go stop the bleeding. Your business—and your team—depend on it.