Mistake 1:  Seeing it as something for the accountants

Yes accountants have an important role to play in financial management in organisations but the reality is that they spend very little of the organisation’s money.  Often when faced with financial problems, non financial managers see it as something to be dealt with by accountants rather than by the whole organisation.

Solution: Start seeing financial turnaround projects as business change projects.

Mistake 2: Trying to rely on quick fixes

Quick fixes such as short term cuts in expenditure or deferring something are clearly important to stop the rot but they are not the route to sustained turnaround of performance.  Think about it, if you had a deep cut that needed stitching to heal properly, you would not merely cover the wound with a plaster or bandage.  You would look for the best long term solution.

Solution:  Use quick fixes as the start point not the end point of financial turnaround.

Mistake 3: Deck chair shuffling

By the term deck chair shuffling, I mean making the easy changes without ever tackling the real issues that are getting in the way of performance. It is easy to delude yourself that you are making a change when in reality all you are doing is making surface level changes within the comfort zone.

Solution:  Make a commitment to keep deck chair shuffling to a minimum and focus energies on the real issues that need tackling, even if they are uncomfortable.

Mistake 4: Short term focus

Anyone can grab the low hanging fruit and achieve short term improvement.  Trouble is that it is only a matter of time before the same problems arise again and the organisation finds itself in a worse position than it already was in.

Solution:  When faced with a turnaround and change situation focus on creating long term sustainable change.

Mistake 5:  Failing to give people enough time

When organisations are facing challenges, it is all too easy to remove the current senior team, bring in the new people and expect them to deliver miracles overnight.  Change, other than that of a short term quick fix strategies takes time. 

Solution:  Give senior people sufficient time to make sustainable change.

Sustainable change is not something that happens overnight.  By avoiding these five common mistakes you can greatly increase the chances of achieving financial turnaround and achieving sustainable change.

1. Seeing it as something for the accountants rather than business change projects.
2. Focusing too much on quick fixes.
3. Deck chair shuffling.  In other words making the easy changes while ignoring the big stuff.
4. Short term focus rather than trying to create sustainable success over the longer term.
5. Failing to give sufficient time to people to make the change happen.

What additional mistakes do you see when it comes to financial turnaround projects?