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Turnaround and Restructure: Creating Strategic Business Units
May 18, 2010 — Anonymous
French will go here
When a turnaround specialist, a.k.a. a Brian Tracy trained FocalPoint Business Coaching Professional, comes in to help a struggling company, the implementation of Strategic Business Units is often the best way to begin.
“With the SBU concept, each product or service is made into a separate business unit within the company. These business units are then grouped with similar product or services in one of three ways: 1) by common characteristics or features; 2) common markets, or 3) common customers to whom the products or services are sold.”
Brian Tracy, Turbostrategy
Create Units. So the first thing you do with the client is establish how many separate business categories are viable within their company. The main criteria for the SBU is that it is essentially autonomous – large enough to control its own performance but small enough to be quickly and easily changed.
The main criteria for the SBU is that it is essentially autonomous – large enough to control its own performance but small enough to be quickly and easily changed.
Create their Business. Once the units are created:
- Develop a complete business plan for each unit and for each unit within the unit. Complete means that each unit has estimated sales revenues, costs, and profitability. It also means that each unit has its own mission statement and objectives.
- Appoint a leader. Accountability becomes a major factor here. By breaking the company into smaller units, accountability becomes more clearly defined. Appointing a leader will give the unit cohesion and direction. In a small business, the owner may be the leader of several SBUs; but at least the pressure becomes evenly distributed and, again, clarity is defined. Each unit can be treated as a separate project.
Create their Strategy. Brian Tracy suggests you divide every product and service offered by a company into four categories: Cash Cows, Stars, Question Marks, and Dogs. Get your client to look honestly and seriously into each line they offer and see if they can slot them into one of those four:
- Cash Cow – A mainstay for the company. A dependable source of revenue. It may not show growth but could be the stability of the business.
- Stars – Bringing in cash and has huge potential for growth.
- Question Mark – Uses cash. May or may not grow.
- Dogs – Has no future, is using money and resources but not producing any revenue. (Sorry Bowser.)
The creation of SBUs should have really clarified these definitions, especially with the all important key concept of profitability.
The strategy becomes pretty basic from here. Your client can now direct their resources, both cash and human, according to where they will give the most return:
- Nurture the Cash Cows
- Promote the Stars
- Decide on the Question Marks
- Discontinue the Dogs.
Have you had experience with SBUs? Would you like a bit more guidance on the implementation process? If you are already a FocalPoint Certified Coach, this would be a good topic for one of our mentoring calls! If you aren’t with us yet, why not take advantage of a free coaching session?
Thanks for reading, any feedback would be greatly appreciated!